Snowden Capital Advisors LLC Settles SEC Charges Over Alleged Undisclosed Conflicts of Interest

Snowden Capital Advisors LLC agreed to pay $364,590.30 and was censured to resolve SEC findings that it failed to fully disclose conflicts of interest tied to compensation its affiliated broker-dealer received, according to an order the SEC released Oct. 30.

According to the order, from at least February 1, 2018 through March 31, 2023, the registered investment adviser "breached its fiduciary duty to its retail advisory clients by failing to fully and fairly disclose the actual and potential conflicts of interest" arising from payments its affiliate, Snowden Account Services LLC, received from a firm the order calls Clearing Firm A.

The SEC says Snowden Account Services marked up the interest rate on clients' margin balances above the base rate charged by Clearing Firm A and kept the additional interest as compensation. The order also says that from February 1, 2018 to June 30, 2020, the affiliate received payments based on Snowden Capital's advisory clients' balances in certain cash sweep money market funds.

The SEC also found that Snowden Capital's retail advisory agreements contained a liability disclaimer, known as a hedge clause, with misleading statements about the scope of its fiduciary duty, and that the firm failed to implement its written policies on the clause.

The order requires Snowden Capital to pay disgorgement of $226,316.99, prejudgment interest of $38,273.31 and a civil penalty of $100,000 into a Fair Fund for distribution to affected clients. Snowden Capital must also cease and desist from further violations.

Snowden Capital consented to the order without admitting the findings, except as to the SEC's jurisdiction, according to the order.