StrategicPoint Investment Advisors has been under investigation for several months by the R.I. Department of Business Regulation as a result of a complaint by an East Greenwich couple alleging improprieties by the company and its representatives.
Both StrategicPoint and the DBR confirmed a probe is under way, but neither would provide details. Providence Business News has, however, obtained a confidential letter dated July 7 in which Maria L. D’Alessandro, associate director and superintendent of securities at the DBR, notifies Focus Financial Partners LLC, which acquired StrategicPoint in 2006, of the probe.
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The letter, addressed to Ruediger Adolf, CEO of the New York company, says the securities division of DBR “believes that there is sufficient and compelling evidence to initiate enforcement action against SPIA in the form of notice of intent to revoke or suspend license, impose civil penalty and of opportunity for hearing charging violations.”
The alleged violations listed include unethical practices, failure to supervise, violations of suitability rules (when specific investments are recommended to people for whom they are not appropriate), excessive trading and misrepresentation of material facts.
In addition, StrategicPoint was alleged to have failed to disclose material conflicts of interest, made untrue statements of materials facts, engaged in fraudulent and deceitful practices and failed to “enforce adequate policies, procedures and systems designed to prevent, detect and address” such violations.
The letter gave StrategicPoint 30 days as of that date to contact the department about a settlement before formal proceedings began. What has happened remains unclear, however, because the investigation is confidential and no findings have been released.
“Our position is that until we have concluded our investigation, the matter is confidential,” said Richard Berstein, executive counsel for the DBR. “There is an investigation, it’s pending, but everything about it is confidential. We may fully exonerate the party or not, but we can have no comment during the investigation.”
StrategicPoint responded to a reporter’s query with this statement:
“StrategicPoint has been an industry leader, trusted advisor and active member of the professional small business community in Rhode Island for over 16 years. It currently manages approximately $550 million on behalf of 1,300 active clients. In the past 16 years, StrategicPoint has never had a regulatory filing against the firm.”
The statement goes on to note that the financial services industry is “highly regulated,” and that “over the years, StrategicPoint has been asked to cooperate with requests for a review by regulatory entities.” The current DBR probe is characterized as such a review.
“It is StrategicPoint’s understanding that DBR reviews are confidential, and it is regrettable that this review has been made public by a third party,” the statement continues. “StrategicPoint will not comment about the specifics of an ongoing confidential review.
“That said, StrategicPoint has cooperated fully with the DBR’s review process, and will continue to do so going forward. … StrategicPoint is confident that the review will conclude that it has consistently operated in the best interest of its clients and shareholders.”
