Tcfg Investment Advisors, Llc

Allegations: THE SEC ALLEGED: BETWEEN IN OR ABOUT JANUARY 2014 AND IN OR ABOUT APRIL 2020, ROBERTS AND TCFG MADE MATERIALLY FALSE AND MISLEADING STATEMENTS TO TCFG'S ADVISORY CLIENTS ("TCFG CLIENTS"). THE DEFENDANTS DEFRAUDED THE TCFG CLIENTS BY FALSELY DISCLOSING THAT TCFG WEALTH MANAGEMENT "MAY" RECEIVE PORTIONS OF THE FEES CHARGED TO TCFG ACCOUNTS BY ITS THIRD PARTY CLEARING AND CUSTODY FIRM ("CLEARING BROKER") WHEN, IN FACT, ROBERTS HAD DIRECTED CLEARING BROKER TO CHARGE TCFG CLIENTS AN ADDITIONAL FEE MARKUP THAT WAS PAID TO TCFG WEALTH MANAGEMENT. ROBERTS AND TCFG FURTHER KNEW, OR WERE RECKLESS AND NEGLIGENT FOR NOT KNOWING, THAT THE MARKED UP PORTION OF THE FEE WAS PASSED ON TO TCFG'S CLIENTS APPROXIMATELY 60 PERCENT OF THE TIME. ROBERTS AND TCFG MADE OTHER MATERIALLY FALSE AND MISLEADING STATEMENTS TO TCFG'S CLIENTS REGARDING THE FEE MARKUPS AND FAILED TO DISCLOSE ADEQUATELY THE CONFLICTS OF INTEREST THEY CREATED FOR DEFENDANTS. ROBERTS USED HIS POSITIONS AS THE CHIEF OPERATING OFFICER, PRESIDENT, MANAGING MEMBER AND, AT TIMES, CHIEF COMPLIANCE OFFICER OF TCFG WEALTH MANAGEMENT TO SUBSTANTIALLY ASSIST AND FURTHER THIS FRAUDULENT CONDUCT AND THE VIOLATIONS OF THE FIDUCIARY DUTIES HE AND TCFG OWED TO TCFG'S CLIENTS. FURTHERMORE, AS THE CHIEF COMPLIANCE OFFICER OF TCFG, ROBERTS AIDED AND ABETTED TCFG'S FAILURE TO IMPLEMENT THE WRITTEN POLICIES AND PROCEDURES THAT WERE REASONABLY DESIGNED TO PREVENT THE SORTS OF DISCLOSURE AND CONFLICT OF INTEREST VIOLATIONS THAT AROSE FROM TCFG WEALTH MANAGEMENT CHARGING AND RECEIVING THESE FEE MARKUPS FROM TCFG CLIENTS. THE SEC ALLEGED: BY ENGAGING IN THIS CONDUCT: (1) DEFENDANTS ROBERTS AND TCFG VIOLATED SECTIONS 206(1) AND 206(2) OF THE ADVISERS ACT; (2) DEFENDANT TCFG VIOLATED SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER; (3) DEFENDANT ROBERTS, PURSUANT TO SECTION 209(F) OF THE ADVISERS ACT, AIDED AND ABETTED TCFG'S VIOLATIONS OF SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER; AND (4) TCFG WEALTH MANAGEMENT, PURSUANT TO SECTION 209(F) OF THE ADVISERS ACT, AIDED AND ABETTED ROBERTS' AND TCFG'S VIOLATIONS OF SECTIONS 206(1) AND 206(2) OF THE ADVISERS ACT. Status: Final Summary: ON SEPTEMBER 30, 2021, THE SECURITIES AND EXCHANGE COMMISSION FILED A COMPLAINT IN THE CENTRAL DISTRICT OF CALIFORNIA, CASE NO. 21-CV-1615 (THE "ACTION"), ALLEGING THAT PRIOR TO MAY 1, 2020, RICHARD JAMES ROBERTS, TCFG INVESTMENT ADVISORS, LLC, AND TCFG WEALTH MANAGEMENT, LLC (COLLECTIVELY, THE "TCFG DEFENDANTS"), VIOLATED CERTAIN PROVISIONS OF THE FEDERAL SECURITIES LAWS, INCLUDING THE ANTI-FRAUD PROVISIONS. THE SEC'S PRESS RELEASE SUMMARIZING ITS ALLEGATIONS IS SET FORTH AT HTTPS://WWW.SEC.GOV/LITIGATION/LITRELEASES/LR-25238. IN SHORT, THE SEC CONTENDED THAT THE TCFG DEFENDANTS, "FROM JUNE 2014 THROUGH APRIL 2020, ? BREACHED THEIR FIDUCIARY DUTY TO ADVISORY CLIENTS [BECAUSE THEY] DISCLOSED THAT TCFG WEALTH "MAY" RECEIVE PORTIONS OF THE FEES CHARGED TO TCFG ACCOUNTS BY ITS UNAFFILIATED CLEARING AND CUSTODY FIRM WHEN, IN FACT, ROBERTS HAD DIRECTED THAT FIRM TO CHARGE TCFG CLIENTS SIGNIFICANT MARKUP FEES THAT WERE PAID TO TCFG WEALTH. THE COMPLAINT ALLEGES THAT TCFG AND ROBERTS LATER DISCLOSED THE EXISTENCE OF MARKUPS, BUT CONTINUED TO MISLEAD TCFG CLIENTS BY CLAIMING THAT IT WAS ONLY IMPOSED "IN SOME LIMITED INSTANCES." ROBERTS AND TCFG ALLEGEDLY KNEW, OR WERE RECKLESS AND NEGLIGENT FOR NOT KNOWING, THAT THE CLEARING AND CUSTODY FIRM'S TICKET CHARGES WERE INSTEAD MARKED UP APPROXIMATELY 60 PERCENT OF THE TIME. THE COMPLAINT FURTHER ALLEGES THAT TCFG - FOR WHICH ROBERTS SERVED AS CHIEF COMPLIANCE OFFICER - FAILED TO IMPLEMENT WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNED TO PREVENT THE SORTS OF DISCLOSURE AND CONFLICT OF INTEREST VIOLATIONS THAT AROSE FROM THESE PRACTICES. ACCORDING TO THE COMPLAINT, ROBERTS USED TCFG WEALTH TO AID AND ABET TCFG'S AND ROBERTS'S VIOLATIONS." ID. THE SEC SPECIFIES IN ITS RELEASE THAT "[T]HE COMPLAINT CHARGES TCFG AND ROBERTS WITH VIOLATING THE ANTIFRAUD PROVISIONS OF SECTIONS 206(1) AND 206(2) OF THE INVESTMENT ADVISERS ACT OF 1940, AND CHARGES TCFG WEALTH WITH AIDING AND ABETTING THOSE VIOLATIONS. THE COMPLAINT ALSO CHARGES TCFG WITH VIOLATING ADVISERS ACT SECTION 206(4) AND RULE 206(4)-7 THEREUNDER, AND ROBERTS WITH AIDING AND ABETTING THOSE VIOLATIONS. THE COMPLAINT SEEKS PERMANENT INJUNCTIONS, DISGORGEMENT WITH PREJUDGMENT INTEREST, AND CIVIL PENALTIES." THE TCFG DEFENDANTS HAVE RESOLVED THE MATTER WITH THE SEC WITHOUT ADMITTING OR DENYING THE UNDERLYING FACTUAL ALLEGATIONS OUTLINED IN THE COMPLAINT. AS PART OF THE RESOLUTION, THE TCFG DEFENDANTS AGREED TO BE ENJOINED FROM FURTHER VIOLATIONS OF SECTIONS 206(2) OF THE INVESTMENT ADVISERS ACT OF 1940 ("ADVISERS ACT") [15 U.S.C. §§ 80B-6(2)], 206(4) OF THE ADVISER ACT [15 U.S.C. § 80B-6(4)] AND RULE 206(4)-7 PROMULGATED THEREUNDER R [17 C.F.R. § 275.206(4)-7], AND SECTION 209(E) OF THE INVESTMENT ADVISERS ACT [15 U.S.C. § 80B-9(E)] OF THE AND PAY DISGORGEMENT OF $287,752.97, PREJUDGMENT INTEREST OF $18,899.30, AND THAT EACH OF THE TCFG DEFENDANTS WOULD PAY A CIVIL PENALTY OF $100,000. THE TCFG DEFENDANTS HAVE FULLY PAID THE MONETARY JUDGMENTS TO WHICH THEY STIPULATED. THE SEC HAS NOT ALLEGED THAT ANY OF THE TCFG DEFENDANTS HAVE VIOLATED ANY LAWS, INCLUDING ANY FEDERAL SECURITIES LAWS, SINCE MAY 1, 2020. THE SPECIFIC TERMS OF THE PARTIES' CONSENSUAL RESOLUTION ARE SET FORTH IN THE JUDGMENTS ENTERED AGAINST EACH DEFENDANT ENTERED IN THE PUBLIC RECORD AND IN CONSENTS TO WHICH THE PARTIES AGREED.

Allegations: THE SEC HAS ALLEGED THE FOLLOWING: FRAUDULENT MISCONDUCT AND BREACH OF FIDUCIARY DUTY BY RICHARD JAMES ROBERTS AND TCFG INVESTMENT ADVISOR, LLC ("TCFG"). THE SEC ALSO ALLEGED ROBERTS USED HIS BROKERDEALER FIRM, TCFG WEALTH MANAGEMENT, LLC ("TCFG WEALTH MANAGEMENT"), TO AID AND ABET THIS MISCONDUCT. THE ALLEGATIONS INCLUDE: BETWEEN IN OR ABOUT JANUARY 2014 AND IN OR ABOUT APRIL 2020, ROBERTS AND TCFG MADE MATERIALLY FALSE AND MISLEADING STATEMENTS TO TCFG'S ADVISORY CLIENTS ("TCFG CLIENTS"). THE DEFENDANTS DEFRAUDED THE TCFG CLIENTS BY FALSELY DISCLOSING THAT TCFG WEALTH MANAGEMENT "MAY" RECEIVE PORTIONS OF THE FEES CHARGED TO TCFG ACCOUNTS BY ITS THIRD PARTY CLEARING AND CUSTODY FIRM ("CLEARING BROKER") WHEN, IN FACT, ROBERTS HAD DIRECTED CLEARING BROKER TO CHARGE TCFG CLIENTS AN ADDITIONAL FEE MARKUP THAT WAS PAID TO TCFG WEALTH MANAGEMENT. ROBERTS AND TCFG FURTHER KNEW, OR WERE RECKLESS AND NEGLIGENT FOR NOT KNOWING, THAT THE MARKED UP PORTION OF THE FEE WAS PASSED ON TO TCFG'S CLIENTS APPROXIMATELY 60 PERCENT OF THE TIME. ROBERTS AND TCFG MADE OTHER MATERIALLY FALSE AND MISLEADING STATEMENTS TO TCFG'S CLIENTS REGARDING THE FEE MARKUPS AND FAILED TO DISCLOSE ADEQUATELY THE CONFLICTS OF INTEREST THEY CREATED FOR DEFENDANTS. ROBERTS USED HIS POSITIONS AS THE CHIEF OPERATING OFFICER, PRESIDENT, MANAGING MEMBER AND, AT TIMES, CHIEF COMPLIANCE OFFICER OF TCFG WEALTH MANAGEMENT TO SUBSTANTIALLY ASSIST AND FURTHER THIS FRAUDULENT CONDUCT AND THE VIOLATIONS OF THE FIDUCIARY DUTIES HE AND TCFG OWED TO TCFG'S CLIENTS. FURTHERMORE, AS THE CHIEF COMPLIANCE OFFICER OF TCFG, ROBERTS AIDED AND ABETTED TCFG'S FAILURE TO IMPLEMENT THE WRITTEN POLICIES AND PROCEDURES THAT WERE REASONABLY DESIGNED TO PREVENT THE SORTS OF DISCLOSURE AND CONFLICT OF INTEREST VIOLATIONS THAT AROSE FROM TCFG WEALTH MANAGEMENT CHARGING AND RECEIVING THESE FEE MARKUPS FROM TCFG CLIENTS. THE SEC ALLEGES THAT BY ENGAGING IN THIS CONDUCT: (1) DEFENDANTS ROBERTS AND TCFG VIOLATED SECTIONS 206(1) AND 206(2) OF THE ADVISERS ACT; (2) DEFENDANT TCFG VIOLATED SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER; (3) DEFENDANT ROBERTS, PURSUANT TO SECTION 209(F) OF THE ADVISERS ACT, AIDED AND ABETTED TCFG'S VIOLATIONS OF SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER; AND (4) TCFG WEALTH MANAGEMENT, PURSUANT TO SECTION 209(F) OF THE ADVISERS ACT, AIDED AND ABETTED ROBERTS' AND TCFG'S VIOLATIONS OF SECTIONS 206(1) AND 206(2) OF THE ADVISERS ACT. Status: Final Sanction Detail: IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT DEFENDANT IS PERMANENTLY RESTRAINED AND ENJOINED FROM VIOLATING, DIRECTLY OR INDIRECTLY, WHILE ACTING AS AN INVESTMENT ADVISER, SECTION 206(2) OF THE INVESTMENT ADVISERS ACT OF 1940 ("ADVISERS ACT") [15 U.S.C. §§ 80B-6(2)] BY USING THE MAILS OR ANY MEANS OR INSTRUMENTALITY OF INTERSTATE COMMERCE TO ENGAGE IN ANY TRANSACTION, PRACTICE, OR COURSE OF BUSINESS WHICH OPERATES AS A FRAUD OR DECEIT UPON ANY CLIENT OR PROSPECTIVE CLIENT. II. IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT DEFENDANT IS PERMANENTLY RESTRAINED AND ENJOINED FROM ANY VIOLATION OF SECTION 206(4) OF THE ADVISER ACT [15 U.S.C. § 80B-6(4)] AND RULE 206(4)-7 PROMULGATED THEREUNDER [17 C.F.R. § 275.206(4)-7], BY KNOWINGLY OR RECKLESSLY PROVIDING SUBSTANTIAL ASSISTANCE TO A REGISTERED INVESTMENT ADVISERS' FAILURE TO ADOPT AND IMPLEMENT WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNED TO PREVENT VIOLATION OF THE ADVISERS ACT AND THE RULES THEREUNDER. III. IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED THAT DEFENDANT IS JOINTLY AND SEVERALLY LIABLE WITH DEFENDANTS RICHARD JAMES ROBERTS AND TCFG WEALTH MANAGEMENT, LLC FOR DISGORGEMENT OF $287,752.97, REPRESENTING NET PROFITS GAINED AS A RESULT OF THE CONDUCT ALLEGED IN THE COMPLAINT, TOGETHER WITH PREJUDGMENT INTEREST THEREON IN THE AMOUNT OF $18,899.30, AND INDIVIDUALLY ORDERED TO PAY A CIVIL PENALTY IN THE AMOUNT OF $100,000 PURSUANT TO SECTION 209(E) OF THE ADVISERS ACT [15 U.S.C. § 80B-9(E)]. DEFENDANT SHALL SATISFY THIS OBLIGATION BY PAYING THE DISGORGEMENT OF $306,652.27 AND THE CIVIL PENALTY OF $100,000 TO THE SECURITIES AND EXCHANGE COMMISSION WITHIN 30 DAYS AFTER ENTRY OF THIS FINAL JUDGMENT. Summary: ON SEPTEMBER 30, 2021, THE SECURITIES AND EXCHANGE COMMISSION FILED A COMPLAINT IN THE CENTRAL DISTRICT OF CALIFORNIA, CASE NO. 21-CV-1615 (THE "ACTION"), ALLEGING THAT PRIOR TO MAY 1, 2020, RICHARD JAMES ROBERTS, TCFG INVESTMENT ADVISORS, LLC, AND TCFG WEALTH MANAGEMENT, LLC (COLLECTIVELY, THE "TCFG DEFENDANTS"), VIOLATED CERTAIN PROVISIONS OF THE FEDERAL SECURITIES LAWS, INCLUDING THE ANTI-FRAUD PROVISIONS. THE SEC'S PRESS RELEASE SUMMARIZING ITS ALLEGATIONS IS SET FORTH AT HTTPS://WWW.SEC.GOV/LITIGATION/LITRELEASES/LR-25238. IN SHORT, THE SEC CONTENDED THAT THE TCFG DEFENDANTS, "FROM JUNE 2014 THROUGH APRIL 2020, ? BREACHED THEIR FIDUCIARY DUTY TO ADVISORY CLIENTS [BECAUSE THEY] DISCLOSED THAT TCFG WEALTH "MAY" RECEIVE PORTIONS OF THE FEES CHARGED TO TCFG ACCOUNTS BY ITS UNAFFILIATED CLEARING AND CUSTODY FIRM WHEN, IN FACT, ROBERTS HAD DIRECTED THAT FIRM TO CHARGE TCFG CLIENTS SIGNIFICANT MARKUP FEES THAT WERE PAID TO TCFG WEALTH. THE COMPLAINT ALLEGES THAT TCFG AND ROBERTS LATER DISCLOSED THE EXISTENCE OF MARKUPS, BUT CONTINUED TO MISLEAD TCFG CLIENTS BY CLAIMING THAT IT WAS ONLY IMPOSED "IN SOME LIMITED INSTANCES." ROBERTS AND TCFG ALLEGEDLY KNEW, OR WERE RECKLESS AND NEGLIGENT FOR NOT KNOWING, THAT THE CLEARING AND CUSTODY FIRM'S TICKET CHARGES WERE INSTEAD MARKED UP APPROXIMATELY 60 PERCENT OF THE TIME. THE COMPLAINT FURTHER ALLEGES THAT TCFG - FOR WHICH ROBERTS SERVED AS CHIEF COMPLIANCE OFFICER - FAILED TO IMPLEMENT WRITTEN POLICIES AND PROCEDURES REASONABLY DESIGNED TO PREVENT THE SORTS OF DISCLOSURE AND CONFLICT OF INTEREST VIOLATIONS THAT AROSE FROM THESE PRACTICES. ACCORDING TO THE COMPLAINT, ROBERTS USED TCFG WEALTH TO AID AND ABET TCFG'S AND ROBERTS'S VIOLATIONS." ID. THE SEC SPECIFIES IN ITS RELEASE THAT "[T]HE COMPLAINT CHARGES TCFG AND ROBERTS WITH VIOLATING THE ANTIFRAUD PROVISIONS OF SECTIONS 206(1) AND 206(2) OF THE INVESTMENT ADVISERS ACT OF 1940, AND CHARGES TCFG WEALTH WITH AIDING AND ABETTING THOSE VIOLATIONS. THE COMPLAINT ALSO CHARGES TCFG WITH VIOLATING ADVISERS ACT SECTION 206(4) AND RULE 206(4)-7 THEREUNDER, AND ROBERTS WITH AIDING AND ABETTING THOSE VIOLATIONS. THE COMPLAINT SEEKS PERMANENT INJUNCTIONS, DISGORGEMENT WITH PREJUDGMENT INTEREST, AND CIVIL PENALTIES." THE TCFG DEFENDANTS HAVE RESOLVED THE MATTER WITH THE SEC WITHOUT ADMITTING OR DENYING THE UNDERLYING FACTUAL ALLEGATIONS OUTLINED IN THE COMPLAINT. AS PART OF THE RESOLUTION, THE TCFG DEFENDANTS AGREED TO BE ENJOINED FROM FURTHER VIOLATIONS OF SECTIONS 206(2) OF THE INVESTMENT ADVISERS ACT OF 1940 ("ADVISERS ACT") [15 U.S.C. §§ 80B-6(2)], 206(4) OF THE ADVISER ACT [15 U.S.C. § 80B-6(4)] AND RULE 206(4)-7 PROMULGATED THEREUNDER R [17 C.F.R. § 275.206(4)-7], AND SECTION 209(E) OF THE INVESTMENT ADVISERS ACT [15 U.S.C. § 80B-9(E)] OF THE AND PAY DISGORGEMENT OF $287,752.97, PREJUDGMENT INTEREST OF $18,899.30, AND THAT EACH OF THE TCFG DEFENDANTS WOULD PAY A CIVIL PENALTY OF $100,000. THE TCFG DEFENDANTS HAVE FULLY PAID THE MONETARY JUDGMENTS TO WHICH THEY STIPULATED. THE SEC HAS NOT ALLEGED THAT ANY OF THE TCFG DEFENDANTS HAVE VIOLATED ANY LAWS, INCLUDING ANY FEDERAL SECURITIES LAWS, SINCE MAY 1, 2020. THE SPECIFIC TERMS OF THE PARTIES' CONSENSUAL RESOLUTION ARE SET FORTH IN THE JUDGMENTS ENTERED AGAINST EACH DEFENDANT ENTERED IN THE PUBLIC RECORD AND IN CONSENTS TO WHICH THE PARTIES AGREED.