April 3, 2014 / 7:25 PM / 4 years ago

UPDATE 1-SEC fines Florida's Transamerica for overcharging clients

(Adds response from Transamerica and description of firm, paragraphs 2, 7)

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

Transamerica, a St. Petersburg, Florida-based broker-dealer that provides products and services to independent brokers, agreed to the settlement and has reimbursed 2,304 current and former client accounts with refunds and credits, the U.S. regulator said.

The firm promotes so-called breakpoint discounts that reduce fees 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 that since 2009, Transamerica failed to process client aggregation requests and also had conflicting policies throughout its branches on whether representatives were required to pass savings from the breakpoint discounts to clients.

The regulator, which had first alerted Transamerica about aggregation problems in 2010, also said the firm 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. The firm must cease and desist from any further violations of the applicable securities laws, and 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.

“We are pleased to have concluded this matter,” a spokeswoman for the firm wrote in an email that said the errors occurred in three different managed account programs. “The failure to link accounts was unintentional.”

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 and David Gregorio)

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