Financial Advisor IQ reports that the SEC has charged advisor Jeffrey Cutter and his investment advisory firm, Cutter Financial Group (CFG), based in Falmouth, Massachusetts for failing to disclose to advisory clients that he received upfront commissions of 7% to 8% for selling fixed index annuities.
Cutter’s attorneys have moved to dismiss the charges, arguing primarily that his duties as an investment adviser were separate from his activities as an insurance agent. The filing contends that the fixed index annuity sales were conducted not in his capacity as an adviser through CFG, but as a licensed insurance agent through an affiliated insurer, Cutterinsure Inc.
Jeff Kern, leader of Sheppard’s Securities Enforcement and Litigation industry team, spoke to Financial Advisor IQ about the motion. “It has a lot of what I would call good surface reasoning, but I don’t expect the court to go along with it because I think it flies in the face of a lot of precedent that allows government actors to get at conduct in a logical way that serves the greater good,” he said.
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