U.S. Securities and Exchange Commission charges One Oak Capital Management and former representative Michael DeRosa over brokerage-to-advisory account conversions that increased client fees

The U.S. Securities and Exchange Commission filed settled charges against registered investment adviser One Oak Capital Management LLC and former adviser representative Michael DeRosa for misconduct tied to advisory services provided to retail clients, including breaches of fiduciary duty. From approximately June 2020 through October 2023, One Oak and DeRosa recommended that DeRosa’s customers at an unaffiliated broker-dealer where he was also employed convert more than 180 brokerage accounts to One Oak advisory accounts. The SEC found they failed to adequately disclose that the conversions would result in significantly higher fees for clients and increased compensation for DeRosa, creating an undisclosed conflict of interest, and that clients generally received no additional services or benefits despite higher costs. The order also found inadequate consideration of clients’ best interests and that many accounts were not suitable to be advisory accounts. Without admitting or denying the findings, One Oak consented to a USD 150,000 civil penalty and to retain an independent compliance consultant to review certain retail-business policies and procedures. DeRosa agreed to a USD 75,000 civil penalty and a nine-month industry suspension.