Facts

The Securities and Exchange Commission instituted cease-and-desist proceedings against Total Wealth Management Inc., Jacob Cooper, Nathan McNamee, and Douglas Shoemaker for allegedly engaging in a scheme to fraudulently collect and conceal their receipt of undisclosed revenue sharing fees obtained from investments that they recommended to their clients.

COMMISSION'S CONTENTIONS:
The SEC contended that defendants breached their fiduciary duties to their clients through the alleged fraudulent scheme by receiving the undisclosed fees which they funneled through entities they created to mask the receipt of the fees. Total Wealth and Cooper, its co-founder, sole owner and CEO also allegedly misrepresented the extent of the due diligence they conducted on the investments they recommended. Furthermore, the SEC contended that Total Wealth failed to obtain annual audits from an independent public accountant as required by the custody rule.

Result

The administrative law judge ordered Cooper to disgorge $1.82 million and pay a civil monetary penalty in the amount of $780,000.