SEC 12b-1 Disclosure Litigation: Background and Outcome
November 1, 2022
Author: CapWealth
CapWealth Advisors, LLC is an SEC registered investment adviser headquartered in Franklin, Tennessee.
Background
In December 2020, the U.S. Securities and Exchange Commission filed a civil enforcement complaint against CapWealth Advisors, LLC in the U.S. District Court for the Middle District of Tennessee. The complaint alleged violations of the Investment Advisers Act of 1940 related to disclosures concerning 12b-1 mutual fund fees. The action arose from the SEC’s Share Class Selection Disclosure Initiative, an industry wide enforcement effort focused on mutual fund share class disclosures.
Procedural History
CapWealth did not settle the matter and contested the SEC’s allegations. The case proceeded through discovery and was tried before a federal jury in the Middle District of Tennessee.
Outcome
After trial, a jury returned a verdict in favor of CapWealth Advisors, LLC on all claims brought by the SEC. The jury found that the SEC did not meet its burden to prove fraud or violations of fiduciary duty related to 12b-1 fee disclosures. No penalties, disgorgement, or sanctions were imposed on CapWealth Advisors, LLC as a result of this matter.
Frequently Asked Questions: SEC 12b-1 Disclosure Litigation
Was CapWealth Advisors involved in an SEC enforcement action?
Yes. In December 2020, the U.S. Securities and Exchange Commission filed a civil enforcement complaint against CapWealth Advisors, LLC in the U.S. District Court for the Middle District of Tennessee.
What was the SEC’s allegation?
The SEC alleged violations of the Investment Advisers Act of 1940 related to disclosures concerning 12b-1 mutual fund fees. The action arose from the SEC’s Share Class Selection Disclosure Initiative, an industry-wide enforcement effort focused on mutual fund share class disclosures.
Did CapWealth settle the matter?
No. CapWealth did not settle the SEC’s allegations and elected to contest the claims in federal court.
What was the outcome of the case?
After trial, a federal jury returned a verdict in favor of CapWealth Advisors, LLC on all claims brought by the SEC.
Did the jury find fraud or a breach of fiduciary duty?
No. The jury found that the SEC did not meet its burden to prove fraud or violations of fiduciary duty related to 12b-1 fee disclosures.
Were any penalties or sanctions imposed on CapWealth?
No. No penalties, disgorgement, or sanctions were imposed on CapWealth Advisors, LLC as a result of this matter.
Where can I find primary source documents about the case?
Why does this information appear in searches about CapWealth?
Regulatory enforcement actions are public records. This page is intended to provide clear, factual information about both the SEC’s filing and the final outcome of the case.
