On September 7, 2022, a federal district court in Pennsylvania entered final judgments against Ambassador Advisors, LLC, a registered investment adviser, and its principals, Bernard I. Bostwick, Robert E. Kauffman, and Adrian E. Young. The judgments order the Defendants to pay over $2 million in disgorgement, prejudgment interest, and civil penalties, broken down as follows: (1) Bernard I. Bostwick must pay $136,620 in disgorgement, $35,273 in prejudgment interest, and a $136,620 civil penalty; (2) Robert E. Kauffman must pay $349,395 in disgorgement, $95,972 in prejudgment interest, and a $349,395 civil penalty; (3) Adrian E. Young must pay $136,627 in disgorgement, $35,275 in prejudgment interest, and a $136,627 civil penalty; and (4) Ambassador Advisors, LLC must pay a $622,642 civil penalty.

In addition, the judgments order the Defendants to correct and remove misleading statements from Ambassador Advisors, LLC's website and Form ADV materials, as well as to send a corrective notice about the case to their advisory clients.

The judgments follow a March 23, 2022, jury verdict finding that Ambassador Advisors, LLC, Bernard I. Bostwick, Robert E. Kauffman, and Adrian E. Young violated Section 206(2) of the Investment Advisers Act of 1940 by breaching fiduciary duties in connection with their mutual fund share class selection practices and receipt of 12b-1 fee revenue. The Court previously granted the SEC partial summary judgment, holding that, in violation of Section 206(4) of the Advisers Act and Rule 206(4)-7, Ambassador Advisors, LLC failed to adopt reasonably designed policies and procedures to safeguard Defendants' fiduciary duties in mutual fund transactions.

The litigation was handled by Christopher R. Kelly, John T. Crutchlow, Gregory R. Bockin, and the Asset Management Unit's Oreste P. McClung, all of Enforcement Division in the Philadelphia Regional Office.