SEC: Valley Forge investment firm deceived, overcharged customers

The owner of a Valley Forge investment firm has agreed to return more than $5 million to customers and pay a $500,000 penalty to settle charges that the firm overcharged investors and misled them about its fees.

In announcing the payments, the SEC said the money would go to 1,200 customers of a company once known as Valley Forge Asset Management. That represents three out of every five of the firm’s customers. The agency said Valley Forge lured customers by saying it charged at least 70 percent less than full commission for buying and selling securities. In fact, the SEC said, its fees were 4½ times higher than what customers could have paid elsewhere.

The payouts and penalty are to be paid by BB&T Corp., a North Carolina-based bank that bought Valley Forge Asset in 2015 and later changed the investment firm’s name to Sterling Advisors. The SEC said the deception overlapped the acquisition, taking place between 2013 and 2016.

David White, a BB&T spokesman, called the disputed practices a “legacy matter.” The bank did not admit or deny the SEC findings. White said, and the SEC agreed, that the sales tactics at issue had ended.

“At BB&T, the best interest of our clients has always been, and continues to be, our number-one priority,” White said.

Kelly L. Gibson, associate director of enforcement in the SEC’s Philadelphia Regional Office, put it differently.

“Valley Forge put its own interests ahead of its advisory clients', causing them to spend more money unnecessarily by portraying inaccurate costs and benefits of using its in-house brokerage,” she said in statement.

Gibson said firms such as Valley Forge, which both provide investment advice and sell and buy stocks, had a duty to be honest with customers about these dual roles. She supervised the investigation, which was conducted by Norman P. Ostrove and Scott A. Thompson, of the SEC office in Philadelphia.

BB&T Securities, the bank’s investment subsidiary, consented to a cease-and-desist order and a censure, and agreed to pay back $4,712,366 in fees, $497,387 in interest, and the $500,000 penalty.

As the Inquirer has previously reported, Valley Forge Asset thrived for many years within the “pay-to-play” culture in the Philadelphia region under which government pension funds and other politically connected investors would hire the firm.

In 2016, a firm founder, Richard Ireland, was charged with taking part in a “bribery scheme” through that year to get former State Treasurer Rob McCord to award contracts to the company. A judge threw out the case the following year. In doing so, the judge said: “No reasonable jury could find that any explicit or implicit quid pro quos took place between Mr. Ireland and Mr. McCord.” Tim Ireland, a spokesman for his father, said in an e-mail Tuesday that his father had ended his ties to the firm years before the date contended by prosecutors.

McCord has been sentenced to serve 2½ years in prison on unrelated charges.

This article has been updated to include the judge’s reasoning in dismissing the criminal case against Richard Ireland.