NewEdge Advisors

Kurta Law is investigating recommendations by NewEdge Advisors (CRD #: 171351). Keep reading if you suffered losses after buying a high-risk product per the recommendation of a NewEdge Advisors representative.

NewEdge Advisors is an advisory firm under NewEdge Capital Group. Representatives of NewEdge Advisors may also be representatives of LPL Financial, Triad Advisors, or NewEdge Securities. NewEdge Securities recently appeared in the news following allegations that its representatives charged unfair prices for municipal and corporate bonds.

What is a Fiduciary Duty?

As a Registered Investment Advisor, NewEdge Advisors owe their customers a fiduciary duty. Fiduciaries are legally obligated to work in their investor’s best interests. Investors can pursue losses if their investment advisor recommends a product based on a conflict of interest. Conflicts of interest are common in the securities industry since certain investment products come with higher commissions than others.

• Misrepresentation of an investment’s features is a common allegation in investor disputes.
• Advisors may also violate their fiduciary duty by recommending an investment with too much risk.

Arbitration in the Securities Industry

Most investment advisory firms require investors to use arbitration to resolve disputes. While arbitration is designed to be cheaper and quicker than suing in a civil court, investment advisory firms have an advantage in arbitration due to their familiarity with the arbitration process and the arbitrators who decide the outcome of the dispute.

Investment fraud lawyers can help you navigate the arbitration process and hold irresponsible investment advisors accountable.

Regulatory Actions

Investors should know that a regulatory action regarding mutual fund sales appears on the NewEdge Advisors’ Form ADV.

$300,000 SEC Fine Regarding Mutual Fund Recommendations

On September 30, 2019, NewEdge Advisors settled an administrative case with the Securities and Exchange Commission. The SEC alleged the firm breached its fiduciary duties by failing to adequately disclose information related to mutual fund share class selection and the fees it received. Allegedly, the firm purchased, recommended, or held for its clients mutual funds that charged 12b-1 fees instead of lower-cost mutual funds that were available.

The SEC fined NewEdge Advisors $300,000 and ordered the firm to pay $900,069 to cover their losses from unnecessarily expensive mutual funds.

What Fees Can NewEdge Advisors Expect to Pay?  

Advisory firms typically charge customers based on a percentage of their assets under management. According to its Brochure, NewEdge Advisors charges a maximum fee of 2.5%.

• The firm may also charge flat fees for financial planning or consulting services.
• Wrap fee clients do not pay transaction-based fees.
• Non-wrap clients pay transaction fees executed by the custodian of their choosing.
• Certain investment products impose their own fees. These include 12b-1 fees for mutual funds, index fund management fees, or surrender charges for variable annuities.
• Investors can also expect to pay fees executed away from their custodian, wire transfer fees, spreads paid to market makers, and taxes on brokerage accounts and securities transactions.
• The brochure also warns that “No Transaction Fees” can have higher ongoing internal expenses.

Conflicts of Interest

Certain products come with commissions for NewEdge advisors, which creates a conflict of interest. Advisors are supposed to clearly communicate these conflicts of interest ahead of any purchase.      

Kurta Law Can Help

Our attorneys are experts in arbitration and do not collect a fee unless we win your case. Contact us today for a free case evaluation: (877) 600-0098 or email info@kurtalawfirm.com.