Ambassador Advisors and its Principals Charged by SEC for Breaching Fiduciary Duties

Bernard Bostwick, Robert Kauffman, and Adrian Young, the principals of Ambassador Advisors, were each named in the complaint. 

The Sonn Law Group is investigating allegations that Ambassador Advisors and its principals committed breaches of their fiduciary duties. If you or a family member has suffered losses investing, we want to discuss your case. Please contact us today for a free review of your case.

Bernard Bostwick (CRD#: 4327954), Robert Kauffman (CRD#: 289384), and Adrian Young (CRD#: 4584675), as well as Ambassador Advisors (collectively, “Defendants”), were named in a complaint filed by the SEC on May 13, 2020. Bostwick, Kauffman, and Young are part owners, executives, and investment adviser representatives of Ambassador Advisors.

The SEC alleges that Ambassador Advisors, as well as Bostwick, Kauffman, and Young, unlawfully invested their advisory clients in mutual fund share classes with 12b-1 fees when lower-cost mutual fund share classes were available to them.

As investment advisers, Bostwick, Kauffman, and Young owed their advisory clients a fiduciary duty to act in their clients’ best interests. This duty included the obligation to seek best execution of clients’ transactions and to fully disclose all material facts about the advisory relationship, including conflicts of interests that might cause them to put their own interest ahead of their clients’. 

Despite this obligation, the complaint alleges that the Defendants, “invested their advisory clients in mutual fund share classes that charged 12b-1 fees when lower-cost share classes of the same funds were available to the clients. As a result, clients received a lower return on their investment, and Bostwick, Kauffman, and Young received additional compensation in the form of 12b-1 fee revenue.

Defendants violated their duty to seek best execution for clients’ mutual fund transactions by causing certain clients to invest in fund share classes that charged 12b-1 fees when share classes of the same funds were available to the clients that presented a more favorable value under the particular circumstances in place at the time of the transactions.”

Additionally, the complaint alleges that the Defendants violated their fiduciary duty by failing to disclose a conflict of interest that existed in the transactions. Specifically, the Defendants should have disclosed that there were in fact share classes of mutual funds that did not charge 12b-1 fees available to them, the Defendants just selected share classes of the same mutual funds with ongoing 12b-1 fees, thus lowering clients’ returns and generating additional revenue for themselves. 

By engaging in these two violations, the complaint alleges that Bostwick, Kauffman, and Young,  enriched themselves at their clients’ expense and without their clients’ knowledge. Additionally, Ambassador Advisors allegedly failed to adopt and implement adequate written policies and procedures designed to make mutual fund share class recommendations in the clients’ best interests and to disclose conflicts of interests in connection with class selection of mutual funds shares. 

Avery is currently being investigated by the Commonwealth of Kentucky Public Department of Financial Institutions based on allegations that he, “placed clients into unregistered promissory notes and failed to provide prospectuses to the promissory note investors or otherwise provide required disclosure documents.”

The complaint alleges that Ambassador, Bostwick, Kauffman, and Young violated the antifraud provisions of Section 206(2) of the Investment Advisers Act of 1940, and that Ambassador violated the antifraud provisions of Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties.

Bernard Bostwick

Bernard Bostwick is the current President of Ambassador advisors. He has been an investment adviser representative for Ambassador since 2011. Until 2019, he was the Executive Vice President of Ambassador. Bostwick currently owns 50% of Ambassador, and owned approximately 33% during the misconduct referenced in the SEC’s complaint. The complaint alleges that Bostwick received between 24% and 29% of the 12b-1 fee revenue derived from mutual fund investments in Ambassador Advisor client account. 

Bostwick is also currently registered as a broker for American Portfolios Financial Services, Inc., in Lancaster, PA, where he has worked since September 2011. 

Robert Kauffman

Robert Kauffman founded Ambassador Advisors and served as President during the period of misconduct referred to in the SEC’s complaint. At that time, he also owned approximately 33% of the company. He has been an investment adviser representative of Ambassador Advisors since at least 2011. According to the SEC’s complaint, he received between 42% and 52% of the 12b-1 fee revenue derived from mutual fund investments in Ambassador Advisors client accounts.

Kauffman is also currently registered as a broker for American Portfolios Financial Services, Inc., in Lancaster, PA, where he has been employed since September 2011. In April 1992, Kauffman was censured by the National Association of Securities Dealers for undisclosed reasons, according to his BrokerCheck report. 

Adrian Young

Adrian Young has been the Executive Vice President, Chief Compliance Officer, and an investment adviser representative of Ambassador Advisors since at least 2011. Young currently owns 50% of Ambassador, and owned approximately 33% during the misconduct referenced in the SEC’s complaint. The complaint alleges that Young received between 24% and 29% of the 12b-1 fee revenue derived from mutual fund investments in Ambassador Advisor client account. 

Young is also currently registered as a broker for American Portfolios Financial Services, Inc., in Lancaster, PA, where he has been employed since September 2011. 

Contact Us Today

The Sonn Law Group is currently investigating allegations that Ambassador Advisors and its principals committed breaches of their fiduciary duties. We represent investors in claims against negligent brokers and brokerage firms. If you or your loved one experienced investment losses, we are here to help. For a free consultation, please call us now at 866-827-3202 or complete our contact form.