The Securities and Exchange Commission (SEC) today announced settled charges against Ohio-based dually registered broker-dealer and investment adviser Key Investment Services, LLC for its failure to address conflicts of interest under the Best Interest Rule and the Investment Advisers Act .
According to the SEC order, between June 30, 2020 and February 2022, Key Investment Services failed to comply with Regulation BI by recommending, through its registered agents and investment adviser representatives, that certain of its brokerage and advisory clients transfer securities by Key Investment Service accounts on new investment accounts with Key Investment Services’ subsidiary, Key Private Bank, a wealth management company owned by the same parent organization, without disclosing that the representatives would receive compensation for making the recommendations and for any securities transfers and therefore had a conflict of interest.
The Order further finds that Key Investment Services’ written policies and procedures were not reasonably designed to achieve compliance with Key Investment Services’ disclosure obligations under Regulation BI and the Advisers Act with respect to conflicts of interest related to transfer recommendations of securities outside of Key Brokerage and Advisory Services Investment Services accounts in investment accounts held at Key Private Bank or to identify and address related conflicts of interest.
SEC order finds that Key Investment Services willfully violated Exchange Act Rule 15l-1(a)(1) and Advisers Act Sections 206(2) and 206(4) and Rule 206(4)-7 based on this.
Without admitting or denying the SEC’s findings, Key Investment Services agreed to a cease and desist order, a reprimand and a $223,228 monetary penalty.