Wealthfront Advisers Llc

Allegations: THE SETTLEMENT ORDER FOUND THAT WEALTHFRONT ADVISERS IMPROPERLY RETWEETED CERTAIN CLIENTS' POSITIVE TWEETS FROM ITS CORPORATE ACCOUNT AND HAD MADE COMPENSATION TO SOME BLOGGERS FOR CLIENT REFERRALS WITHOUT PROPER DISCLOSURES. ADDITIONALLY, THE SETTLEMENT ORDER FOUND THAT WEALTHFRONT ADVISERS DID NOT HAVE PROPER DISCLOSURES IN ITS TAX-LOSS HARVESTING WHITEPAPER CONCERNING MONITORING FOR ANY AND ALL WASH SALES THAT COULD OCCUR IN CLIENT ACCOUNTS. A WASH SALE PREVENTS THE TAX BENEFIT OF HAVING SOLD THE ASSET TO REALIZE A LOSS. THUS, A WASH SALE CAN DIMINISH THE EFFECTIVENESS OF TAX-LOSS HARVESTING BY DEFERRING TO A FUTURE YEAR A TAX LOSS THAT COULD HAVE BEEN USED TO OFFSET INCOME OR CAPITAL GAINS IN THE CURRENT YEAR. IN WEALTHFRONT'S TAX-LOSS HARVESTING PROGRAM, WASH SALES COULD OCCUR, OR WERE PERMITTED, IN CERTAIN CIRCUMSTANCES RELATING TO THE MANAGEMENT OF A CLIENT ACCOUNT SUCH AS REBALANCING A CLIENT PORTFOLIO OR CLIENT DIRECTED TRANSACTIONS. THE SEC ORDER NOTED THAT A SIGNIFICANT PERCENTAGE OF CLIENT ACCOUNTS ENROLLED IN WEALTHFRONT ADVISERS' TAX-LOSS HARVESTING STRATEGY EXPERIENCED WASH SALES IN THE PERIOD FROM OCTOBER 2012 TO MAY 2016 AND THAT WASH SALES REPRESENTED APPROXIMATELY 2.3% OF TAX LOSSES HARVESTED FOR CLIENTS IN THE PERIOD FROM JANUARY 2014 TO DECEMBER 2016. Status: Final Sanction Detail: 1. NOTICE TO ADVISORY CLIENTS. WITHIN THIRTY (30) DAYS OF ENTRY OF THE ORDER, WEALTHFRONT ADVISERS SHALL NOTIFY EACH OF ITS CLIENTS OF THE ENTRY OF THE ORDER AND PROVIDE EACH WITH A COPY OF THE ENTIRE ORDER IN A FORM NOT UNACCEPTABLE TO THE STAFF. 2. CERTIFICATE OF COMPLIANCE. WEALTHFRONT SHALL CERTIFY, IN WRITING, COMPLIANCE WITH THE UNDERTAKING SET FORTH ABOVE. THE CERTIFICATION SHALL IDENTIFY THE UNDERTAKING, PROVIDE WRITTEN EVIDENCE OF COMPLIANCE IN THE FORM OF A NARRATIVE, AND BE SUPPORTED BY EXHIBITS SUFFICIENT TO DEMONSTRATE COMPLIANCE. THE COMMISSION STAFF MAY MAKE REASONABLE REQUESTS FOR FURTHER EVIDENCE OF COMPLIANCE, AND RESPONDENT AGREES TO PROVIDE SUCH EVIDENCE. THE CERTIFICATION AND SUPPORTING MATERIAL SHALL BE SUBMITTED TO JEREMY PENDREY, ASSISTANT REGIONAL DIRECTOR, ASSET MANAGEMENT UNIT, DIVISION OF ENFORCEMENT, WITH A COPY TO THE OFFICE OF CHIEF COUNSEL OF THE ENFORCEMENT DIVISION, NO LATER THAN SIXTY (60) DAYS FROM THE DATE OF THE COMPLETION OF THE UNDERTAKING. Summary: PAID MONETARY FINE OF $250,000 ON JANUARY 2, 2019, AND EMAILED ALL CLIENTS A LINK TO THE SEC SETTLEMENT ORDER ON JANUARY 18, 2019.