SEC Penalizes New England Securities, McConnell and Rozek for Misrepresenting Advisory Client Rebalancing Services

The SEC has settled charges and imposed hefty sanctions arising from the failure to carry out promises of rebalancing investor portfolios.

The SEC found that New England Securities (NES) marketed and sold a computer program that allowed investors to select a model asset allocation portfolio of securities. Investors were told that the firm would regularly screen their accounts to determine whether the account allocations remained balanced. If not, NES represented that it would notify clients and rebalance upon request.

However, NES failed to provide these rebalancing services to a large number of clients. In settling the matter, NES agreed to disgorge over $2 million and provide restitution to clients. Additionally, Thomas McConnell was fined and received a 1 year bar. Jonathan Rozek was fined and received a 1 year suspension.

Source: SEC Release Nos. IA-2489, IA-2847 and IA 2488