What You Need to Know
- The firm invested clients’ assets in a mutual fund share class charging 12b-1 fees when lower cost shares were available, SEC said.
- Ambassador says that the convoluted nature of the issue led the jury to side with the SEC.
- SEC is creating new regulation without following the formal rule-making process, Ambassador said.
After an eight-day trial, a jury serving in the United States District Court for the Eastern District of Pennsylvania ruled late Wednesday in favor of the Securities and Exchange Commission against Ambassador Advisors and three of its executives for breaches of fiduciary duties for investing their clients in mutual fund share class that charged 12b-1 fees.
The ruling was against Bernard Bostwick, Robert Kauffman, and Adrian Young and their investment advisory firm, Ambassador Advisors of Lancaster, Pennsylvania.
Gurbir Grewal, director of the SEC’s Division of Enforcement, said Wednesday in a statement that the SEC is “pleased with today’s jury verdict holding the defendants liable for investment advisory fraud. Investment advisers have fiduciary duties to act in their client’s best interest, to seek best execution of client transactions, and to fully and fairly disclose all material facts relating to conflicts of interest.”
When they don’t, Grewal continued, “as the jury found today, they put their clients at risk. That’s why we will continue to pursue investment advisers who breach their…
