SEC Charges Colorado Investment Adviser and Representative with Disclosure Failures

ADMINISTRATIVE PROCEEDING
File No. 3-20366

June 14, 2021 – The Securities and Exchange Commission today announced settled charges against Intervest International, Inc., a registered investment adviser based in Colorado Springs, Colorado, and one of its investment adviser representatives, Craig L. Carson, for breaching their fiduciary duties in connection with purchases of certain unit investment trusts (UITs) and funds in advisory client accounts.

According to the SEC’s order, from at least April 2016 through August 2019, Carson, on behalf of certain Intervest advisory client accounts, recommended and purchased UITs and Class A shares of mutual funds and an interval fund that included sales charges or front-end loads even though the accounts were eligible to purchase cheaper, identical versions of the UITs and funds.  As a result of the purchases, the order finds, the advisory clients paid $378,295 in avoidable transaction costs.  The order finds that a wholly-owned subsidiary of Intervest that acted as the introducing broker on the transactions collected these costs as commissions and passed on a portion to Carson, who also served as a registered representative of the subsidiary.  As set forth in the order, Intervest and Carson did not adequately disclose to their advisory clients the conflicts of interest that arose from the purchases of the UITs and funds.  The order also finds that Intervest and Carson breached their duty to seek best execution for those transactions.

The SEC’s order finds that Intervest and Carson violated Section 206(2) of the Investment Advisers Act of 1940.  Without admitting or denying the findings in the SEC’s order, Intervest and Carson agreed to a cease-and-desist order, censures, and to pay disgorgement with prejudgment interest of $130,489 and $304,396, respectively, all of which Intervest will distribute to the affected clients.  Intervest and Carson also agreed to pay civil penalties of $75,000 and $50,000, respectively. 

The SEC’s investigation was conducted by Noel M. Franklin of the Denver Regional Office, and supervised by Kimberly L. Frederick and Jason J. Burt.