Pennsylvania-based Valley Forge Asset Management has agreed with the US’ Securities and Exchange Commission (SEC) to return over $5m (£3.8m, €4.4m) to its investors after the regulator found it mislead them.
The firm, which was bought by BB&T Securities, part of the Branch Banking and Trust (BB&T) Company of North Carolina, mislead its advisory clients into believing they were receiving a discount rate for the full in-house services, when scientifically less expensive options were available externally.
The clients that agreed to the discounted rates did not receive any additional services to the ones who chose other services that were, indeed, at lower commission rates.
SEC revealed that Valley Forge’s ‘discounted rates’ commissioned 4.5 times more that clients who used other options, and that the firm hid the price difference by claiming it was giving clients a 70% discount off of the supposed retail commission.
The firm, in addition to giving the money back their clients, has to pay a $500,000 penalty to settle charges.
“Valley Forge put its own interests ahead of its advisory clients, causing them to spend more money unnecessarily by portraying inaccurate costs and benefits,” said Kelly Gibson, associate director of enforcement in the SEC’s Philadelphia regional office.
