SEC reportedly charges RIA McDermott Investment Advisors with UIT overcharges
According to theSecurities and Exchange Commission, the regulator has charged McDermott Investment Advisors and its chief executive for allegedly defrauding clients by purportedly charging improper transaction costs related to unit investment trusts (UITs).
Between March 2013 and December 2014, the firm purportedly failed to offer clients a more affordable option of security, and instead allegedly invested their clients in a version of a security that charged “significant transactional sales charges when the identical security without these costs was available.”
According to SEC allegations, the firm and chief executive allegedly violated their fiduciary duty since they reportedly had access to two versions of unit investment trust, including a fee-based version for advisory clients and another version for retail broker-dealer clients who were not in an advisory program and paid for services on a per-transaction basis.
Investors were reportedly charged two separate and unnecessary fees when they purchased the more expensive retail version, incurring a 0.5% “creation and development fee and a transactional sales fee, approximately 90% of which went to the broker-dealer making the trade.
Clients in fee-based accounts had those transactional charges of 2.45% to 3.45% reportedly waived, according to the SEC.
The firm purportedly disadvantaged investors by purchasing a total of 558,975 units of the more expensive standard UITs for clients, in approximately 169 advisory accounts, generating approximately $160,000.
Investigating Potential Lawsuits
The White Law Group is investigating potential lawsuits involving McDermott Investment Advisors and the liability they may have for improper UIT sales.
Brokerage firms and RIAs are required to perform due diligence on any offering they recommend. They must ensure that all recommendations are suitable in light of the client’s age, investment experience, net worth, income, and investment objectives.
If a firm fails to perform due diligence or makes an unsuitable recommendation, a broker-dealer can be held responsible for any losses in a FINRA arbitration claim and an RIA can be held responsible either in a private arbitration or in court.
If you have concerns regarding your UIT investment with McDermott Investment Advisors and would like to speak with a securities attorney about your options, please call The White Law Group at 888-637-5510.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Franklin, Tennessee.
For more information on The White Law Group and its representation of investors, please visit https://www.whitesecuritieslaw.com.