SEC Secures Win in Commonwealth Financial Revenue Sharing Suit

Commonwealth Financial Network violated federal law by not disclosing to clients certain conflicts that involved revenue-generating investment choices, a federal judge ruled.

The ruling is a win for the Securities and Exchange Commission, which sued the Massachusetts-based investment adviser in 2019, alleging Commonwealth didn’t adequately disclose revenue sharing arrangements that incentivized it to choose more expensive investments.

US District Judge Indira Talwani in Boston rejected arguments that the SEC’s requirements are unclear and Commonwealth didn’t have fair notice of the disclosure obligations.

Courts have found “that economic conflicts of interest must be disclosed under the Advisers Act,” Talwani wrote in ...