The Securities and Exchange Commission (SEC) has sanctioned two investment advisory firms for failing to seek best execution on client trades placed with their in-house brokerage divisions. The first firm, A.R. Schmeidler & Co. (ARS) failed to re-evaluate whether it was providing best execution for its advisory clients when it negotiated more favourable terms with its clearing firm, resulting in ARS retaining a greater share of client commissions. ARS agreed to pay more than $1 million to settle its charges with the SEC.

The second firm, Goelzer Investment Management (GIM) made misrepresentations in its Form ADV about a comparative process of selecting itself as broker for advisory clients. GIM failed to seek best execution for its clients by recommending itself as broker for its advisory clients without evaluating other introducing-broker options as the firm represented it would. GIM agreed to pay nearly $500,000 to settle its charges with the SEC.