The Securities and Exchange Commission has entered an Order finding that Valley Forge Asset Management, as a division of BB&T Securities, made statements to clients which misled them into believing they were receiving full, in-house, brokerage services at a discount when in fact there were significantly less expensive options available.
Valley Forge offered its advisory clients three choices for brokerage services. In the first, a client could direct his or her brokerage to Valley Forge’s own “full-service brokerage” and negotiate his or her commission rates. Valley Forge generally told clients under this option that it would provide a discount of at least 70% off of their full commission rates.
According to the SEC, Valley Forge Asset Management used misleading statements and inadequate disclosures about its services and pricing to convince customers to choose the in-house broker, but did not provide those clients with any additional services than it did to clients who chose other brokerages with significantly lower commissions.
Valley Forge charged commissions averaging roughly 4.5 times more than what clients would have paid using other brokerage options and obscured the price difference by claiming that it was giving clients a 70 percent discount off of its supposed retail commission rate, according to the SEC order.
BB&T neither admitted nor denied the findings but consented to a cease-and-desist order, a censure, and agreed to pay a disgorgement of $4,712,366 plus prejudgment interest of $497,387 to repay affected clients, plus a $500,000 penalty. BB&T has likewise ended Valley Forge’s existing directed brokerage program by amending its cost structure and disclosures.
If you or someone you know lost money as a client of Valley Forge Asset Management or BB&T Securities due to unsuitable, misrepresented, or unauthorized transactions, please call the Frankowski Firm at 888.741.7503 or fill out this contact form.