SEC charges Beverly Hills RIA with keeping $131,000 in unearned fees
Agency says Margaret Black didn't refund money due to 63 clients who left firm.
The Securities and Exchange Commission said it has settled with a Beverly Hills, Calif., RIA firm and its majority owner, Margaret Mulligan Black, who it claims improperly refused to refund $131,000 in unearned advisory fees to 63 departing advisory clients.
The SEC censured the firm and imposed a $100,000 civil penalty. It also imposed a $50,000 penalty on Ms. Black.
The SEC also charged that the firm, Beverly Hills Wealth Management, made material misstatements in written disclosures to clients concerning the firm’s financial condition.
According to an April 2016 SEC order instituting administrative and cease-and-desist proceedings, the advisory firm and Ms. Black had withheld the money from the departing clients who had requested, via e-mail, that the firm terminate their relationship.
The firm and Ms. Black initially refused to recognize the requests as a proper termination notice, the SEC said. Instead, they demanded what they termed “wet signatures” on the requests, even though the firm’s policies and written disclosures permitted clients to terminate their relationship with the firm via email.
The order also found that Beverly Hills Wealth Management failed to disclose that it was insolvent at the time the requests came in and that it had taken out loans totaling $700,000 to keep the business afloat. The firm is currently in default on the loans, the SEC said.
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