SEC fines Florida's Transamerica for overcharging clients

NEW YORK, April 3 Thu Apr 3, 2014 2:18pm EDT

NEW YORK, April 3 (Reuters) - The U.S. Securities and Exchange Commission on Thursday fined Transamerica Financial Advisors of St. Petersburg, Fla. $553,624 and ordered it to reimburse clients the same amount for improperly calculating advisory fees and overcharging clients.

Transamerica, which has been registered as a financial adviser since 1991, agreed to the settlement and has reimbursed 2,304 current and former client accounts with refunds and credits, the U.S. regulator said.

A Transamerica spokeswoman did not immediately return a call for comment.

The firm promotes to clients so-called breakpoint discounts that reduce fees owed as clients increase assets in certain investment programs. It allows them to aggregate values of related accounts to qualify for the discounts.

The SEC found, however, that Transamerica since 2009 failed to process every aggregation request by clients and also had conflicting policies throughout its branches on whether its representatives were required to pass savings from the breakpoint discounts to clients.

The regulator, which had first alerted Transamerica about aggregation problems in 2010 after an examination of a branch office, had inadequate policies and procedures to ensure that fees were being calculated properly. It also failed to undertake a firm-wide review of all client accounts as SEC examiners had recommended in 2010.

Transamerica agreed to a censure without admitting or denying the SEC's findings and must cease and desist from any further violations of the applicable securities laws. It agreed to hire an independent consultant to review its policies and procedures pertaining to its account opening forms, fee schedules, and fee computation methodologies.

A regulatory filing by an advisory unit of Transamerica said the firm charges either a fixed fee with a minimum of $250 for its advisory services, or an hourly fee ranging from $25 to $300, in addition to fees for buying and selling managed account programs.

The SEC charges recall its broad finding of Wall Street breakpoint malfeasance a decade ago. In 2004, 15 large brokerage firms agreed to pay more than $21.5 million in fines and over $86 million in "disgorged" profits to settle charges of denying breakpoint discounts to mutual fund customers.

(Reporting By Jed Horowitz; editing by Andrew Hay)

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