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 in compliance with Regulation Best Interest and the Investment Advisers Act.
According to the SEC’s Order, between June 30, 2020 and February 2022, Key Investment Services failed to comply with Regulation BI by recommending, through its registered representatives and investment adviser representatives, that certain of its brokerage customers and advisory clients transfer securities from Key Investment Services accounts to new investment accounts with Key Investment Services’ affiliate Key Private Bank, a wealth management firm that is part of 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 regard to conflicts of interest associated with the recommendations to transfer securities out of Key Investment Services brokerage and advisory accounts to investment accounts held at Key Private Bank or to identify and address the associated conflicts of interest.
The SEC’s order finds that Key Investment Services willfully violated Rule 15l-1(a)(1) of the Exchange Act and Sections 206(2) and 206(4) of the Advisers Act and Rule 206(4)-7 thereunder.
Without admitting or denying the SEC’s findings, Key Investment Services has agreed to a cease-and-desist order, a censure, and a civil money penalty of $223,228.
