WASHINGTON (AP) — Brokerage firm TD Waterhouse Investor Services has agreed to pay a $2 million civil fine to settle allegations that it made undisclosed payments to three investment adviser firms to lure their clients' business, the Securities and Exchange Commission said Tuesday.
The SEC announced the settlement agreement reached last week with the big discount brokerage, which is owned by Canada's Toronto Dominion Bank.
It was the agency's first case against a brokerage firm for allegedly making undisclosed cash payments to outside investment advisers, SEC officials said.
The SEC also announced settlements with two of the investment advisers and their principals for alleged failure to disclose the cash payments. Kiely Financial Services of Greenville, N.C., and its principal, Joseph Kiely, agreed to pay a $100,000 civil fine and to return the money they were said to have received from TD Waterhouse plus interest, an amount totaling $54,256. Rudney Associates of San Ramon, Calif., and its principal, Eric Rudney, agreed to pay a $40,000 civil fine and to return $22,331.
Wall Street-based TD Waterhouse and the two investment adviser firms neither admitted to nor denied the allegations in their settlements with the SEC.
The SEC's administrative case against the third investment adviser, Brandt, Kelly & Simmons of Southfield, Mich., and its principal, Kenneth Brandt, is still pending. The firm's attorney, Brian Witus, did not immediately return a phone call seeking comment.