Finance

Wealthfront, world’s best robo-advisor, just settled with regulators over fraud charges

Wealthfront, world's best robo-advisor, just settled with regulators over fraud charges
Wealthfront, world's best robo-advisor, just settled with regulators over fraud charges

Two of the robo advisers were the first people to face the enforcement action from the Exchange Commission and Securities this Friday.

The SEC finally came with a settlement plan with Wealthfront and Hedgeable. The end of the settlement group was fined of a total amount of $300,000. Wealthfront is known for managing more than $11 billion of the clients’ money and after all these, Hedgeable will be discontinuing its investment management platform this summer to avoid all the heat.

The SEC, also known as the Securities and Exchange Commission has become the first to work against robo advisers and form a settlement this Friday with two companies on charges of fraud.

The Securities and Exchange Commission had a settlement deal of $250,000 with Wealthfront and a deal of $80,000 with Hedgeable. Both the companies which were fined by Securities and Exchange Commission was known for providing automated investing service for helping out their clients. Both the companies were charged for violating different rules on antifraud, compliance, and advertising.

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Robo advisers have become very much popular in the past few years and this is why, all the regulatory bodies kept a very close eye on them. As soon as they broke some of the laws, they were charged with a hefty fine.

According to Securities and Exchange Commission, the fine was needed for both the companies because if they failed to take a big step in the initial days then these two companies can end up creating a big fraud.

In the year 2017, the Securities and Exchange Commission made sure to issue robo adviser related guidelines for all the investors in this company so that they fall under the effective compliance program.

Technology is something that is changing very rapidly in the global market. With the growth in technology, people are also getting very much interested to invest their money. With the change in technology in the global market, all the investment advisers are also changing the way they deal with the clients and this made them change their course of action.

During this change, all the companies have not followed the guidelines and this is why they had to pay such a big amount of fine. The fine was charged to make the other companies aware that are not following the guidelines will end up in a big fine.

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