SEC Charges Registered Investment Adviser Zoe Financial for Failure to Disclose Conflict of Interest

The Securities and Exchange Commission announced on Sept. 28, 2026 that it has settled charges against Zoe Financial Inc. for failing to fully and fairly disclose material conflicts of interest to clients and prospective clients. The SEC’s order describes a referral service operated by Zoe Financial that used an algorithm to propose third-party investment advisers for individuals seeking recommendations. Sales staff frequently followed up with prospects who did not schedule meetings with algorithm matches and in many of those conversations suggested additional advisers beyond the algorithm’s recommendations.

In January 2023 Zoe Financial introduced Zoe Wealth, a suite of sub-advisory, onboarding, and back-office support services for advisers in its network. The SEC’s order says Zoe Financial had a financial incentive for network advisers to adopt Zoe Wealth and encouraged their use. Although the matching algorithm did not take advisers’ use of Zoe Wealth into account, the order finds that salesperson involvement in referrals led to many suggestions of advisers who were not originally generated by the algorithm, creating an undisclosed conflict of interest.

The SEC also found shortcomings in Zoe Financial’s disclosures about other conflicts. While the firm had disclosed that certain advisory firms held indirect minority interests in Zoe Financial and acknowledged that presented a conflict, the order states Zoe Financial did not accurately describe the measures it used to mitigate that conflict. The agency concluded that the failures to disclose were willful and therefore contrary to advisers’ fiduciary duties.

Without admitting the SEC’s findings, Zoe Financial agreed to a cease-and-desist order, a censure, and a civil monetary penalty of $450,000. The SEC noted remedial steps taken by the firm, including revisions to its compliance manual and hiring an in-house chief compliance officer. Sheldon Pollock, Associate Director of the SEC’s New York Regional Office, emphasized that advisers must fully and fairly disclose material conflicts in all aspects of their services, including when they add new technologies or features.