Valentine Capital Asset Management, a California-based registered investment adviser, agreed to settle an SEC enforcement action by disgorging approximately $400,000 it received in excess commissions, paying a $70,000 penalty, and agreeing to be censured.

According to the SEC complaint, the adviser recommended to its clients that they switch from one of its principal funds to another principal fund without disclosing to the clients that by switching funds, they would pay commissions, although most had already paid the full extent of commissions in connection with the fund in which they had initially invested. The failure to disclose this information was material according to the SEC, and constituted a violation of the anti-fraud provisions under the Investment Advisers Act of 1940 and a breach of the investment adviser's fiduciary duties to its clients.