SEC Orders Firms to Pay $3.4 Million in Penalties for Forms 13F, 13H Reporting Failures

The U.S. Securities and Exchange Commission recently announced charges against 11 institutional investment managers for failing to file reports, known as Forms 13F, that they were required to file because they have discretion over more than $100 million in certain securities.

Two of the entities, Nationale-Nederlanden Powszechne Towarzystwo Emerytalne S.A. (Nationale-Nederlanden) and NEPC LLC, were also charged with failing to file Forms 13H as required for large traders who trade a significant amount of exchange-listed securities.

All 11 firms agreed to settle the SEC’s charges. Nine of the firms will pay more than $3.4 million in combined civil penalties. Two firms were not ordered to pay any civil penalties because they self-reported the violations at issue and otherwise cooperated with the SEC’s investigations, and another – NEPC – was not ordered to pay a civil penalty for its failure to file Forms 13H because it self-reported those violations and otherwise cooperated with the SEC’s investigations.

The institutional investment managers charged and their respective penalties are:

• Ashton Thomas Private Wealth LLC, $375,000;
• Azzad Asset Management Inc., $225,000;
• Bulltick Wealth Management LLC, $175,000;
• Dixon Mitchell Investment Counsel Inc., no financial penalty;
• Financial Synergies Wealth Advisors Inc., $225,000;
• Focus Financial Network Inc., $475,000;
• Mason Investment Advisory Services Inc., $525,000;
• Nationale-Nederlanden, no financial penalty;
• NEPC LLC, $725,000;
• TD Private Client Wealth LLC, $475,000; and
• Traphagen Investment Advisors, LLC – $225,000.

Examples of details about those failing to file Forms 13F, and with the largest civil penalties included:

Since at least December 2019, Mason Investment Advisory Services, a registered investment adviser, has had investment discretion over at least $100 million of reportable securities and was therefore obligated to file quarterly Forms 13F beginning by at least February 2020. However, Respondent failed to file Forms 13F until February 2024. Mason offers personal financial planning services, investment management for private individuals and families, and investment advisory services for institutional nonprofit organizations. As of April 23, 2024, it had total regulatory assets under management of $12.2 billion. In 2021, the SEC filed separate settled charges against Mason for breaches of fiduciary duty in connection with its mutual fund share class selection practices and the receipt of fees by its affiliated broker-dealer between February 2014 and September 2016.

Since at least December 2019, Focus Financial Network RIA has had investment discretion over at least $100 million of reportable securities and was, thus, obligated to file quarterly Forms 13F beginning by at least February 2020. However, it failed to file Forms 13F until Feb. 12, 2024. Focus is a partnership of financial services firms providing various services, including asset management services. As of Dec. 31, 2023, it had total regulatory AUM of $5.4 billion.

Since at least December 2019, TD Private Client Wealth RIA has had investment discretion over at least $100 million of reportable securities and was therefore obligated to file quarterly Forms 13F beginning by at least February 2020. However, Respondent failed to file Forms 13F until August 2024. The RIA is a Delaware limited liability company with its principal place of business in New York, N.Y. It offers investment advisory services to clients through separate wrap fee programs and as of March 31, 2024, had total regulatory AUM of $6 billion.

“The integrity of the securities markets depends largely on firms providing accurate, timely information about their securities holdings and trading activity,” said Jason Burt, director of the Denver office. “These resolutions illustrate how seriously the Commission takes non-compliance as well as the benefits a firm may derive from self-reporting its non-compliance.”

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