Additionally, the SEC alleged that VFA did not disclose to its K-12 advisory clients that three Member Benefit Coordinators (MBCs) are full-time VALIC employees. The Commission noted that the MBCs were “deceptively identified” as the Teachers Union Entity’s MBCs at various retirement planning seminars and events attended by K-12 teachers.
“VFA’s conduct constituted a course of business which operated as a fraud or deceit upon clients and prospective clients, and as a result, VFA violated Sections 206(2) and Section 206(4) of the Investment Advisers Act of 1940, and Rules 206(4)-3 and 206(4)-7 thereunder,” according to the Commission’s Order.
To resolve this case, VFA agreed to pay a civil penalty of $20 million to the SEC. The firm also agreed to cap the management fee for its Guided Portfolio Solutions advisory product for all K-12 403(b) and K-12 457(b) participants in Florida.
VFA breaches its fiduciary duty to clients
In the second regulatory action, the SEC accused VFA of making false and misleading statements and failing to disclose conflicts of interest related to its receipt of millions of dollars in financial benefits from clients’ mutual fund investments.
