The U.S. Securities and Exchange Commission (SEC) announced a settlement of charges against Key Investment Services, LLC, a dual-registered broker-dealer and investment adviser based in Ohio, for failing to address conflicts of interest as required by the Regulation Best Interest (Reg BI) and the Investment Advisers Act.

According to the SEC’s order, from June 30, 2020, to February 2022, Key Investment Services, through its registered representatives and investment adviser representatives, recommended that certain brokerage customers and advisory clients transfer securities from Key Investment Services accounts to new investment accounts at Key Private Bank, an affiliated wealth management company under the same parent organization. These recommendations were made without disclosing that the representatives would receive compensation for making the recommendations and any resulting securities transfers, thus creating conflicts of interest and failing to comply with Regulation Best Interest.

The order further found that Key Investment Services’ written policies and procedures were unreasonably designed and insufficient to fulfill its disclosure obligations under Reg BI and the Advisers Act. Specifically, the policies and procedures failed to address conflicts of interest related to the recommendation to transfer securities from Key Investment Services brokerage and advisory accounts to Key Private Bank investment accounts, nor could they identify and resolve related conflicts of interest.

The SEC’s order determined that Key Investment Services willfully violated Section 15l-1(a)(1) of the Securities Exchange Act and Sections 206(2) and 206(4) of the Advisers Act, as well as Rule 206(4)-7 thereunder.

Without admitting or denying the SEC’s findings, Key Investment Services agreed to a cease-and-desist order, a censure, and a civil penalty of $223,228.