Judge Orders Ambassador Advisors to Pay $2M Over 12b-1 Fee Infractions
In March, a jury ruled in favor of the SEC against Ambassador Advisors and three of its executives.
A federal district court in Pennsylvania has entered final judgments against Ambassador Advisors LLC, an RIA, and its principals for breaching fiduciary duties in connection with their mutual fund share class selection practices and receipt of 12b-1 fee revenue.
After an eight-day trial in March, a jury serving in the United States District Court for the Eastern District of Pennsylvania ruled in favor of the Securities and Exchange Commission against Ambassador Advisors and three of its executives related to the 12b-1 fee infractions.
The judgments, issued on Sept. 7, order the defendants to pay over $2 million in disgorgement, prejudgment interest and civil penalties as follows:
- Bernard I. Bostwick must pay $136,620 in disgorgement, $35,273 in prejudgment interest, and a $136,620 civil penalty;
- Robert E. Kauffman must pay $349,395 in disgorgement, $95,972 in prejudgment interest, and a $349,395 civil penalty;
- Adrian E. Young must pay $136,627 in disgorgement, $35,275 in prejudgment interest, and a $136,627 civil penalty; and
- Ambassador Advisors, LLC must pay a $622,642 civil penalty.
The judgments also order the defendants to correct and remove misleading statements from Ambassador Advisors LLC’s website and Form ADV materials, as well as to send a corrective notice about the case to their advisory clients.