Three of the AIG Advisor Group’s subsidiaries have agreed to pay $9.5m to the US Securities and Exchange Commission (SEC) to settle charges that they steered mutual fund clients into more expensive share classes to collect more fees.
Under the settlement, AIG’s affiliates Royal Alliance Associates, SagePoint Financial and FSC Securities agreed to pay more than $2m in improper fees plus prejudgment interest and a $7.5m penalty.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
The SEC said the firms directed mutual fund clients toward share classes that charged fees for marketing and distribution despite the clients being eligible to buy shares in fund classes without those additional charges.
The three broker-dealers earned about $2m in extra fees through this practice.
The SEC alleged that three firms failed to inform clients of the potential conflict of interest in selecting share classes that would generate more revenue for them.
The three units also failed to monitor for so-called reverse churning, or charging certain customers a flat fee even when they rarely made trades, SEC said in a statement.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataThe SEC added that the firms had compliance policies and procedures to ensure that fee-based or wrap advisory accounts that charged an inclusive fee for both advisory services and trading costs remained in the best interest of clients that traded infrequently, but failed to implement those policies and procedures.
The firms have agreed to be censured, without admitting or denying the findings.
SEC co-chief enforcement division’s asset management unit Marshall Sprung said: "Investment advisers must be vigilant about conflicts of interest when selecting mutual fund share classes because the choice may improperly benefit them at the expense of their clients."
