SEC v. Cambridge Investment Research Advisors, Inc.; and Cambridge Investment Research, Inc., No. LR-26274, Southern District of Iowa (Mar. 20, 2025) — Press Release

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 26274 / March 20, 2025 Securities and Exchange Commission v. Cambridge Investment Research Advisors, Inc., et al., No. 4:22-cv-00071-SMR-SBJ (S.D. Iowa filed Mar. 1, 2022) SEC Obtains Final Judgment Against Investment Adviser Arising from Undisclosed Conflicts in Mutual Fund and Account Recommendations On March 19, 2025, the Securities and Exchange Commission obtained a final judgment by consent against Cambridge Investment Research Advisors, Inc. (CIRA), a registered investment adviser based in Fairfield, Iowa. The Commission had charged CIRA with failing to disclose material conflicts of interest and breaching its duty of care related to its recommendation to place clients in wrap accounts and its selection of mutual funds and money market sweep funds for clients. The SEC’s complaint filed in the United States District Court for the Southern District of Iowa on March 1, 2022, alleged that since at least 2014, CIRA repeatedly breached its fiduciary duty to advisory clients by investing client assets in certain mutual funds and money market sweep funds that generated millions of dollars in revenue sharing payments to an affiliated broker-dealer, Cambridge Investment Research, Inc. (CIRI), instead of lower-cost share classes and investment options that would have yielded less or no revenue sharing. The complaint further alleged that CIRA converted hundreds of accounts to its more expensive wrap account program without adequate disclosure and without analyzing whether doing so was in its clients' best interests. CIRA also avoided paying millions of dollars of transaction fees as a result of its mutual fund recommendations and failed to disclose conflicts resulting from its investment adviser representatives’ receipt of forgivable loans in exchange for maintaining certain asset levels and tenure with CIRI, according to the complaint. CIRA consented to entry of the final judgment, without admitting or denying the allegations in the complaint, permanently enjoining it from violating Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7 thereunder. The final judgment further orders CIRA to pay $15 million in monetary relief, consisting of $10,164,698 in disgorgement, $3,035,302 in prejudgment interest, and a $1,800,000 civil penalty, and to administer the distribution of such amounts to harmed clients. In connection with the final judgment, the SEC dismissed its relief defendant claim against CIRI. The SEC’s litigation was conducted by Timothy Stockwell and Jonathan Polish of the SEC’s Chicago Regional Office and David Benson of the SEC’s Asset Management Unit in the Denver Regional Office. It was supervised by Asset Management Unit Chief Corey Schuster, Associate Director Paul Montoya, and Assistant Director Jeffrey Shank.

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 26274 / March 20, 2025 Securities and Exchange Commission v. Cambridge Investment Research Advisors, Inc., et al., No. 4:22-cv-00071-SMR-SBJ (S.D. Iowa filed Mar. 1, 2022) SEC Obtains Final Judgment Against Investment Adviser Arising from Undisclosed Conflicts in Mutual Fund and Account Recommendations On March 19, 2025, the Securities and Exchange Commission obtained a final judgment by consent against Cambridge Investment Research Advisors, Inc. (CIRA), a registered investment adviser based in Fairfield, Iowa. The Commission had charged CIRA with failing to disclose material conflicts of interest and breaching its duty of care related to its recommendation to place clients in wrap accounts and its selection of mutual funds and money market sweep funds for clients. The SEC’s complaint filed in the United States District Court for the Southern District of Iowa on March 1, 2022, alleged that since at least 2014, CIRA repeatedly breached its fiduciary duty to advisory clients by investing client assets in certain mutual funds and money market sweep funds that generated millions of dollars in revenue sharing payments to an affiliated broker-dealer, Cambridge Investment Research, Inc. (CIRI), instead of lower-cost share classes and investment options that would have yielded less or no revenue sharing. The complaint further alleged that CIRA converted hundreds of accounts to its more expensive wrap account program without adequate disclosure and without analyzing whether doing so was in its clients' best interests. CIRA also avoided paying millions of dollars of transaction fees as a result of its mutual fund recommendations and failed to disclose conflicts resulting from its investment adviser representatives’ receipt of forgivable loans in exchange for maintaining certain asset levels and tenure with CIRI, according to the complaint. CIRA consented to entry of the final judgment, without admitting or denying the allegations in the complaint, permanently enjoining it from violating Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7 thereunder. The final judgment further orders CIRA to pay $15 million in monetary relief, consisting of $10,164,698 in disgorgement, $3,035,302 in prejudgment interest, and a $1,800,000 civil penalty, and to administer the distribution of such amounts to harmed clients. In connection with the final judgment, the SEC dismissed its relief defendant claim against CIRI. The SEC’s litigation was conducted by Timothy Stockwell and Jonathan Polish of the SEC’s Chicago Regional Office and David Benson of the SEC’s Asset Management Unit in the Denver Regional Office. It was supervised by Asset Management Unit Chief Corey Schuster, Associate Director Paul Montoya, and Assistant Director Jeffrey Shank.