SEC VERIFY DATA
Federal action over fee billing and RIA eligibility. Learn how fee math, idle money, Form ADV data and RAUM level can affect manager review.
RIA FEE REVIEW
A federal order in Sep 2026 put fee billing and RIA eligibility under legal review. The matter can help explain why fee math, idle money, Form ADV data, RAUM level and client agreement all matter when evaluating a manager. A regulatory record may confirm that a firm filed with a federal agency, yet it cannot alone prove that every fee debit or eligibility claim align with the governing agreement. Independent review can remain vital.
https://www.sec.gov/enforcement-litigation/administrative-proceedings/ia-6996-s
On September 18, 2026, the U.S. Securities and Exchange Commission announced settled administrative proceedings against Pursino Advisory Group LLC, commonly referred to as PAG, and Philip Pursino, the firm's sole owner and operator. The SEC found that PAG and Pursino overcharged advisory clients, charged fees inconsistent with the firm's Form ADV and client agreements, and failed to withdraw PAG's SEC registration after the firm no longer met the applicable eligibility threshold.
The case is especially useful for adviser due diligence because the core issue is not a hidden fund, false investment product or fictitious portfolio. It is fee administration. Investors can correctly identify a registered adviser, confirm its Form ADV and still be charged incorrectly if the billing process does not match the advisory contract.
WHY ADVISORY FEE CONTROLS MATTER
Investment-adviser fees can appear straightforward.
A client may agree to pay 1% annually, 0.75%, a tiered rate or another percentage based on assets under management.
But the actual billing process can become more complicated.
The adviser must determine which assets are included in the fee base, which rate applies, whether fees are billed quarterly or monthly, whether they are charged in advance or arrears, and whether particular cash balances or unmanaged assets should be excluded.
Small errors can compound over time.
A billing mistake that appears minor in one quarter can become material when repeated across multiple clients and multiple years.
The SEC order involving Pursino Advisory Group illustrates this clearly.
According to the Commission, PAG and Pursino overbilled 28 clients by a total of $53,984.64 between January 2020 and March 31, 2023.
FORM ADV FEE DISCLOSURES SHOULD MATCH ACTUAL BILLING
One of the central findings in the order is that PAG charged advisory fees above the fees disclosed in its Form ADV and agreed to by clients.
This distinction is important.
Form ADV is not simply a regulatory filing used by the SEC.
It also serves as a public disclosure source for clients and prospective clients.
If an advisory firm states one fee schedule in Form ADV but calculates client invoices using a higher rate, the investor may be paying more than the disclosed economics.
A strong RIA review should therefore compare three sources:
the fee schedule in Form ADV,
the investment advisory agreement,
and the actual amount deducted from the client account.
Those three figures should reconcile.
If they do not, the difference deserves explanation.
Investors should not assume that a fee debit is correct merely because it was automatically deducted by a custodian.
Custody automation can execute the fee calculation supplied by the adviser, but it does not necessarily verify that the calculation matches the advisory contract.
UNMANAGED CASH CAN CREATE A HIDDEN BILLING ISSUE
The SEC order contains a particularly useful detail.
According to the Commission, PAG and Pursino charged one client $22,078.69 in advisory fees on cash assets that were not managed by PAG.
This is a different type of billing problem from simply applying the wrong percentage rate.
The issue becomes the fee base itself.
Suppose an account contains securities actively managed by the adviser together with a large cash balance.
If the adviser is not actually providing investment management on that cash, charging the same advisory fee on the cash position may be inconsistent with the agreement or disclosed fee methodology.
That does not mean an adviser can never charge a fee on cash.
Some advisory agreements expressly include cash in the fee base.
The relevant question is whether the contract and Form ADV clearly authorize the charge and whether the adviser is actually providing the service for which the fee is being collected.
This is why investors should understand how cash, money-market funds, externally managed holdings and legacy positions are treated for billing purposes.
FEE ERRORS CAN BE OPERATIONAL RATHER THAN INTENTIONAL FRAUD
The Pursino matter also provides an important contrast with classic fraud cases.
The SEC order focuses on overbilling and registration eligibility rather than a scheme involving invented investments or misappropriated client funds.
That makes the case useful because regulatory risk is not limited to dramatic misconduct.
A registered adviser can face enforcement action when operational systems repeatedly produce charges that do not match client agreements.
This creates a broader compliance lesson.
Billing systems should not rely entirely on manual spreadsheets or informal calculations.
A mature process should have independent review, exception reporting and periodic reconciliation.
The adviser should be able to show how each client's fee was calculated and why the billed asset base matches the contract.
RAUM ALSO DETERMINES REGULATORY ELIGIBILITY
The second major issue in the SEC order concerns Regulatory Assets Under Management, or RAUM.
According to the Commission, PAG remained registered with the SEC from at least June 30, 2023 until June 28, 2024 even though it no longer had sufficient RAUM to qualify for federal registration.
The SEC order states that because PAG was a New York-based investment adviser, it was generally prohibited from remaining registered with the Commission unless it managed at least $25 million in regulatory assets under management.
That point is significant because investors often interpret SEC registration as a permanent status.
It is not.
An adviser's eligibility can change as assets rise or fall, the business model changes or another regulatory category becomes applicable.
A firm that once qualified for SEC registration may later need to withdraw and become subject to state-level registration instead.
REGISTRATION STATUS SHOULD BE REVIEWED OVER TIME
A current Form ADV shows the firm's status at a particular point in time.
Historical filings can reveal more.
Investors researching an adviser should review whether the firm has consistently maintained the asset level required for its registration category and whether amendments were filed when circumstances changed.
A firm with declining assets may continue to appear in historical SEC records even after its federal eligibility changes.
The Pursino case shows why that history matters.
According to the SEC, PAG did not withdraw its registration until June 28, 2024 even though the Commission found that the firm had lacked sufficient RAUM from at least June 30, 2023.
That gap lasted roughly one year.
A registration record therefore should not be read as a simple binary indicator of adviser quality.
The more useful question is whether the firm was properly eligible for that status during the relevant period.
FORM ADV IS BOTH A MARKETING DOCUMENT AND A COMPLIANCE RECORD
Many advisory firms use their Form ADV disclosures as part of the trust-building process.
Clients may search the firm on IAPD, confirm that it appears in SEC records and interpret that presence as evidence of institutional credibility.
That makes accuracy especially important.
The document is not merely administrative paperwork.
It can influence how investors evaluate the firm.
If fee schedules, assets under management or regulatory status are inaccurate, the Form ADV can present a different picture from the client's actual economic relationship.
For FilingDossier-style research, this creates a useful verification framework.
Form ADV should be compared with client agreements, billing statements, custody records and historical amendments.
The filing is the starting point.
The economic reality should match it.
HOW TO CHECK AN ADVISER'S ACTUAL FEE
A client can perform a basic fee review without sophisticated software.
The first step is to identify the contractual annual fee rate.
The second is to determine the billing period.
The third is to identify the account value used to calculate the fee.
The fourth is to determine whether cash, unmanaged securities or external assets are included.
The fifth is to compare the expected fee with the actual deduction.
For example, if a $1 million account is billed at 1% annually on a quarterly basis, the approximate quarterly fee would ordinarily be about $2,500 before considering daily valuation methods, asset changes or other contractual adjustments.
If the actual deduction is materially higher, the client should ask how the fee was calculated.
More complex tiered schedules require additional care.
A firm might charge 1% on the first $1 million, 0.75% on the next amount and a lower rate above another threshold.
Billing software must apply the tiers correctly.
A small programming or spreadsheet error can create systematic overcharges across many accounts.
CASH SHOULD BE REVIEWED SEPARATELY
Cash deserves special attention because large balances may temporarily accumulate after a sale, transfer or liquidity event.
If a client maintains substantial cash while waiting for another investment decision, the advisory fee treatment should be clear.
Some advisers include all account assets in the billing base.
Others exclude certain cash.
Still others charge only when they actively manage the cash allocation.
The correct treatment depends on the agreement.
The SEC's finding involving $22,078.69 of fees on unmanaged cash illustrates why the client's account statement alone is not enough.
The client should understand not only the fee percentage but also which assets are being multiplied by that percentage.
OWNERSHIP CONCENTRATION CAN INCREASE CONTROL RISK
The SEC describes Philip Pursino as PAG's sole owner and operator.
That structure is common among smaller RIAs.
It can provide clients with direct access to the principal, but it may also concentrate operational authority.
When one person controls investment decisions, billing, compliance and business administration, independent review becomes especially important.
The issue is not that sole-owner advisory firms are inherently problematic.
Many operate successfully.
The question is whether enough checks exist around sensitive functions.
Fee calculations should ideally be reviewed by someone other than the person who benefits from the fees.
External compliance consultants, custodians, accountants or billing systems can add independent layers.
Again, the specific control structure matters more than the firm's size.
SECTION 206(2) AND FIDUCIARY DUTY
The SEC order found that PAG and Pursino willfully violated Section 206(2) of the Investment Advisers Act of 1940.
Section 206(2) is an important fiduciary provision.
It addresses transactions, practices or courses of business that operate as a fraud or deceit upon clients or prospective clients.
In advisory fee cases, the issue often centers on whether clients paid amounts inconsistent with disclosed or agreed terms.
The adviser-client relationship depends heavily on accurate fee disclosure because the adviser directly benefits from the amount charged.
That creates an inherent conflict requiring clear disclosure and accurate implementation.
Clients should be able to determine what they are paying and why.
IMPROPER FEDERAL REGISTRATION IS A DIFFERENT COMPLIANCE FAILURE
The SEC separately found violations involving Section 203A and Rule 203A-1.
Those provisions govern when advisers may register with the SEC.
The Commission found that PAG remained registered even though it did not satisfy the applicable eligibility requirements.
This is legally distinct from the fee issue.
One concerns what clients were charged.
The other concerns whether the firm belonged in the federal registration category.
Combining both in one order makes the case particularly useful for due diligence because it shows that adviser compliance operates on multiple levels.
An RIA can have accurate portfolio management and still have registration or billing deficiencies.
FILINGDOSSIER INDEPENDENT ANALYSIS
The Pursino Advisory Group order illustrates a less dramatic but highly practical form of adviser risk.
Clients do not need to encounter a Ponzi scheme or nonexistent investment to suffer economic harm.
They can lose money through recurring fee errors.
That makes billing verification part of investment due diligence.
The key principle is simple:
- the fee disclosed in Form ADV,
- the fee written in the advisory agreement,
- the assets included in the fee base,
- and the amount actually deducted
should all tell the same story.
The registration issue adds another layer.
An SEC registration record is useful, but it should not automatically be interpreted as proof that the adviser remained eligible for federal registration throughout every historical period.
Regulatory status can change with RAUM.
For investors researching smaller RIAs, historical Form ADV amendments can therefore be as important as the latest filing.
The SEC's September 2026 order found that PAG and Pursino overbilled 28 clients by $53,984.64 and charged one client $22,078.69 on cash that PAG was not managing.
The Commission also found that PAG remained improperly registered with the SEC for a period when it lacked sufficient RAUM.
PAG and Pursino settled without admitting the SEC's findings, except as provided in the order.
The case reinforces a core FilingDossier principle: regulatory status should be verified, but the financial relationship between adviser and client should be verified too.
KEY FINDINGS
The SEC entered a settled order involving Pursino Advisory Group LLC and Philip Pursino on September 18, 2026.
Philip Pursino was PAG's sole owner and operator.
The SEC found that 28 advisory clients were overbilled by $53,984.64.
The relevant overbilling period ran from January 2020 through March 31, 2023.
The SEC found that some advisory fees exceeded the rates disclosed in PAG's Form ADV and agreed to by clients.
One client was charged $22,078.69 in fees on cash assets that were not managed by PAG.
The SEC found that PAG lacked sufficient RAUM to remain registered with the Commission from at least June 30, 2023.
PAG withdrew its SEC registration on June 28, 2024.
According to the SEC order, PAG generally needed at least $25 million in RAUM to remain federally registered as a New York-based adviser.
The SEC found violations of Advisers Act Section 206(2), Section 203A and Rule 203A-1.
PAG agreed to pay a $25,000 civil penalty.
Philip Pursino agreed to pay a $15,000 civil penalty.
Both respondents agreed to a censure and cease-and-desist relief.
SEC SNAPSHOT
Firm: Pursino Advisory Group LLC Principal: Philip Pursino SEC Action Date: September 18, 2026 Administrative File Number: 3-22734 Advisers Act Release Number: IA-6996 Location: Long Island, New York Relevant Fee Period: January 2020 to March 31, 2023 Clients Overbilled: 28 Total Overbilling Found by SEC: $53,984.64 Unmanaged Cash Fee Charged to One Client: $22,078.69 Improper Registration Period Identified by SEC: At least June 30, 2023 through June 28, 2024 RAUM Level Referenced by SEC for Federal Eligibility: $25 million Primary Violations Found: Advisers Act Section 206(2), Section 203A and Rule 203A-1 PAG Civil Penalty: $25,000 Philip Pursino Civil Penalty: $15,000 Resolution: Settled administrative and cease-and-desist proceeding Admission Status: Respondents settled without admitting the SEC's findings, except as stated in the order Primary Research Lesson: Verify both the fee calculation and the adviser's historical eligibility for SEC registration