Jury Ruled Ambassador Advisors Overcharged Customers for Mutual Funds
According to news reports today, a jury in Pennsylvania has ruled that Ambassador Advisors, along with three executives and advisors, breached their fiduciary duty in picking mutual fund share classes with 12b-1 fees.
The SEC reportedly filed a civil complaint in 2020 alleging that from at least Aug.15, 2014, through December 2018, registered investment advisor, Ambassador Advisors, along with part owners, executives and investment advisor representatives of the firm unlawfully put their clients into mutual fund share classes charging 12b-1 fees when the customers were eligible for lower-cost share classes. Consequently, the defendants violated their duty to seek best execution for their clients, according to the complaint.
According to its website, Ambassador Advisors, headquartered in Lancaster County, PA, is focused on “biblically-based wealth management and financial strategies.”
The firm and executives allegedly violated their fiduciary duty through failure to make proper disclosure about their conflicts of interest regarding their selection of the share classes, according to the SEC.
U.S. District Court for the Eastern District of Pennsylvania entered a summary judgment in favor of the SEC against Ambassador Advisors in December 2021. The Court reportedly ruled that the company didn’t adopt and implement written policies and procedures reasonably designed to prevent violations of the Investment Advisers Act.
After an eight-day trial this week a jury agreed by ruling in favor of the SEC, concluding that the defendants breached their fiduciary duty in connection with the share class selection, according to a press announcement.
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