Delaware News

AG Jennings takes action against financial adviser for charging unreasonable fees

Department of Justice Press Releases | Date Posted: Friday, July 19, 2024


Navy blue background featuring the Delaware state seal in the center
Attorney General Kathy Jennings this week filed a complaint against former Delaware investment adviser Elbert C. Smalls and his investment advisory firm, known as Winyah Financial Services, LLC or Winyah Financial, LLC (formerly operating in Delaware as Sun Financial Services, Inc.). The complaint is the culmination of an investigation by the Investor Protection Unit (the “IPU”), the arm of the Delaware Department of Justice that regulates the registration and conduct of securities firms and professionals in the state. The complaint alleges that Mr. Smalls and his firm charged clients unreasonably excessive fees, made misstatements to clients and regulators, and failed to keep records in compliance with state law. In some instances, the fees charged by Smalls amounted to over thirty percent of the assets he managed for any given client, on an annual basis.  Although neither Mr. Smalls nor his firm are currently registered in Delaware, the complaint asserts that both continue to operate in Delaware under conditions that require registration and, therefore, oversight by the Investor Protection Unit.
“Protecting investors from unscrupulous financial professionals is at the core of investor protection,” said Jennings.  “Fees charged to clients must be reasonable, and investment advisers must live up to their fiduciary obligations not to take advantage of clients who lack familiarity with appropriate fee practices in the industry.”
 
The IPU initiated the administrative matter against Mr. Smalls and his advisory firm seeking, among other things, restitution for clients who paid unreasonable fees and an order that Mr. Smalls and his firm cease and desist operating in Delaware. 
 
Proper registration of investment professionals is important as it allows regulators to better monitor activity and ensure appropriate oversight of the industry and individuals. “Investment professionals may not simply choose to avoid IPU oversight by operating while unregistered,” said Jennings. For help checking the registration status of your financial professional, or to file a complaint, please contact the Investor Protection Unit at Investor.Protection@delaware.gov. The Investor Protection Unit also encourages investors to check the registration status of financial professionals at brokercheck.finra.org and adviserinfo.sec.gov.
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AG Jennings takes action against financial adviser for charging unreasonable fees

Department of Justice Press Releases | Date Posted: Friday, July 19, 2024


Navy blue background featuring the Delaware state seal in the center
Attorney General Kathy Jennings this week filed a complaint against former Delaware investment adviser Elbert C. Smalls and his investment advisory firm, known as Winyah Financial Services, LLC or Winyah Financial, LLC (formerly operating in Delaware as Sun Financial Services, Inc.). The complaint is the culmination of an investigation by the Investor Protection Unit (the “IPU”), the arm of the Delaware Department of Justice that regulates the registration and conduct of securities firms and professionals in the state. The complaint alleges that Mr. Smalls and his firm charged clients unreasonably excessive fees, made misstatements to clients and regulators, and failed to keep records in compliance with state law. In some instances, the fees charged by Smalls amounted to over thirty percent of the assets he managed for any given client, on an annual basis.  Although neither Mr. Smalls nor his firm are currently registered in Delaware, the complaint asserts that both continue to operate in Delaware under conditions that require registration and, therefore, oversight by the Investor Protection Unit.
“Protecting investors from unscrupulous financial professionals is at the core of investor protection,” said Jennings.  “Fees charged to clients must be reasonable, and investment advisers must live up to their fiduciary obligations not to take advantage of clients who lack familiarity with appropriate fee practices in the industry.”
 
The IPU initiated the administrative matter against Mr. Smalls and his advisory firm seeking, among other things, restitution for clients who paid unreasonable fees and an order that Mr. Smalls and his firm cease and desist operating in Delaware. 
 
Proper registration of investment professionals is important as it allows regulators to better monitor activity and ensure appropriate oversight of the industry and individuals. “Investment professionals may not simply choose to avoid IPU oversight by operating while unregistered,” said Jennings. For help checking the registration status of your financial professional, or to file a complaint, please contact the Investor Protection Unit at Investor.Protection@delaware.gov. The Investor Protection Unit also encourages investors to check the registration status of financial professionals at brokercheck.finra.org and adviserinfo.sec.gov.
image_printPrint


Graphic that represents delaware news on a mobile phone

Keep up to date by receiving a daily digest email, around noon, of current news release posts from state agencies on news.delaware.gov.

Here you can subscribe to future news updates.