2026-04-07 SEC Press pdf 249 KB 48,337 chars

In re Empower Advisory Group

Exhibit of SEC Announces Enforcement Results for Fiscal Year 2025

Enriched metadata

Scheme: investment-adviser-fraud (98%)
Outcome: settled
Disgorgement: $5,989,970
Victim loss: $90,000

Classified investment-adviser-fraud(confidence 98%). EDGAR detection: forms ADV/ADV-E/ADV-W/Form D· recall 33% / precision 13%. detection rule →

Extracted insights

Dollar amounts 8

$159.00B $159 billion ≥$1B
$5.99M $5,989,969 $1M–$10M
$4.06M $4,063,569 $1M–$10M
$750K $750,000 $100K–$1M
$426K $426,400 $100K–$1M
$90K $90,000 $10K–$100K
$60K $60,000 $10K–$100K
$12K $11,500 $10K–$100K

Entities 6

person compensation system
company empower advisory group, llc and empower financial services, inc.
person empower financial services
person misleading statements
company retirement plan advisors
agency Securities and Exchange Commission

Triples 8

SEC Institutes Administrative and Cease-and-Desist Proceedings
Empower Advisory Group, LLC and Empower Financial Services, Inc. Submitted Offers of Settlement
SEC Determined to Accept Offers of Settlement
Respondents Consent to Entry of This Order
Respondents Made Misleading Statements
Respondents Employed Retirement Plan Advisors
Respondents Utilized Compensation System
Empower Financial Services Did Not Provide Full and Fair Written Disclosure

PDF

In re Empower Advisory Group · Source

Text layers

Extracted body text (48,337c)

UNITED STATES OF AMERICA
Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 103809 / August 29, 2025

INVESTMENT ADVISERS ACT OF 1940
Release No. 6911 / August 29, 2025

ADMINISTRATIVE PROCEEDING
File No. 3-22517

In the Matter of

Empower Advisory Group,
LLC

and

Empower Financial Services,
Inc.

Respondents.

ORDER INSTITUTING ADMINISTRATIVE
AND CEASE-AND-DESIST PROCEEDINGS,
PURSUANT TO SECTIONS 15(b) AND 21C
OF THE SECURITIES EXCHANGE ACT OF
1934 AND SECTIONS 203(e) AND 203(k) OF
THE INVESTMENT ADVISERS ACT OF
1940, MAKING FINDINGS, AND IMPOSING
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER

The Securities and Exchange Commission (“Commission”) deems it appropriate and in
the public interest that public administrative and cease-and-desist proceedings be, and hereby
are, instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934
(“Exchange Act”), and Sections 203(e) and 203(k) of the Investment Advisers Act of 1940
(“Advisers Act”), against Empower Advisory Group, LLC (“Empower Advisory”) and Empower
Financial Services, Inc. (“Empower Financial Services”) (collectively, “Respondents”).

II.

In anticipation of the institution of these proceedings, Respondents have submitted Offers
of Settlement (the “Offers”) which the Commission has determined to accept. Solely for the
purpose of these proceedings and any other proceedings brought by or on behalf of the
Commission, or to which the Commission is a party, and without admitting or denying the
findings herein, except as to the Commission’s jurisdiction over them and the subject matter of
these proceedings, which are admitted, Respondents consent to the entry of this Order Instituting
Administrative and Cease-And-Desist Proceedings, Pursuant to Sections 15(b) and 21C of the
Securities Exchange Act of 1934 and Sections 203(e) and 203(k) of the Investment Advisers Act

of 1940, Making Findings, and Imposing Remedial Sanctions and a Cease-And-Desist Order
(“Order”), as set forth below.

III.

On the basis of this Order and Respondents’ Offers, the Commission finds1 that:

Summary

1. This matter concerns inadequate disclosure of conflicts of interest and misleading
statements by Respondents in connection with advising participants in Empower Retirement,
LLC’s (“Empower”) Government Markets segment about whether to enroll in Empower
Advisory’s Managed Account service, a fee-based advisory service that provides retirement plan
participants with ongoing discretionary portfolio management of their in-plan retirement
accounts. Participants enrolled in the service pay Empower Advisory a quarterly asset-based fee
as negotiated by their retirement plan sponsor.

2. From July 1, 2019, through December 31, 2022 (the “Relevant Period”),

Respondents employed Retirement Plan Advisors, all of whom were both registered
representatives associated with Empower Financial Services and investment adviser
representatives with Empower Advisory. Retirement Plan Advisors were responsible for
providing retirement and financial education and advice to retirement plan participants in
Empower Retirement, LLC’s Government Markets segment (“Plan Participants”).

3. During the Relevant Period, Respondents utilized a compensation system that
incentivized certain Government Markets Retirement Plan Advisors––with bonuses and merit
raises––to enroll Plan Participants in the Managed Account service.

4. Empower Financial Services did not provide full and fair written disclosure of the

capacity in which Retirement Plan Advisors were acting when providing advice or a
recommendation that a Plan Participant enroll in the Managed Account service. Rather than
specifically disclosing to Plan Participants whether they were acting in the capacity of either a
registered representative or an investment adviser representative, Retirement Plan Advisors
disclosed to Plan Participants that they were dually licensed and placed the burden on Plan
Participants to clarify the capacity. Additionally, Respondents did not adequately disclose the
conflicts of interest that the incentive compensation system presented for certain Retirement Plan
Advisors. This omission rendered misleading certain Retirement Plan Advisor statements to
Plan Participants regarding the Retirement Plan Advisors’ role in discussing or recommending
enrollment in the Managed Account service. This included statements made by certain
Retirement Plan Advisors that they were salaried and/or noncommissioned. Some Retirement
Plan Advisors also told Plan Participants that they were acting in a fiduciary capacity and that
they were acting in the Plan Participant’s best interest. These statements, which were in

1 The findings herein are made pursuant to Respondents’ Offers of Settlement and are not binding on any

other person or entity in this or any other proceeding.

connection with the purchase or sales of securities, assured Plan Participants that Retirement Plan
Advisors were providing disinterested advice when they enrolled their in-plan retirement
accounts in the Managed Account service, but did not disclose their financial incentives to do so.

5. Empower Financial Services did not establish, maintain, and enforce written

policies and procedures reasonably designed to identify and address conflicts of interest in
connection with recommendations to enroll in the Managed Account service.

6. Based on the foregoing and as detailed below, Empower Advisory violated

Section 206(2) of the Advisers Act and Empower Financial Services failed to comply with the
Disclosure and Conflict of Interest Obligations of Regulation Best Interest (“Reg BI”), thereby
violating Reg BI’s General Obligation (Exchange Act Rule 15l-1(a)(1)).

Respondents

7. Empower Advisory is a registered investment adviser (SEC# 801-58105) with its
principal place of business in Greenwood Village, Colorado. Empower Advisory has been
registered with the Commission as an investment adviser since November 2000 and, on its Form
ADV dated May 14, 2025, reported more than $159 billion in regulatory assets under
management. Empower Advisory operated as Advised Assets Group, LLC until it changed its
name to Empower Advisory Group, LLC on August 2, 2022.

8. Empower Financial Services is a registered broker-dealer (SEC# 8-33854) with
its principal place of business in Greenwood Village, Colorado. Empower Financial Services
has been registered with the Commission since April 1985. Empower Financial Services is an
affiliate of Empower Advisory and all transactions that occur as a result of participation in the
Managed Account service are executed by Empower Financial Services. Empower Financial
Services operated as GWFS Equities, Inc. until it changed its name to Empower Financial
Services, Inc. on August 2, 2022.

Related Entity

9. Empower, whose principal place of business is in Greenwood Village, Colorado,

was organized in Colorado on May 17, 1993. Empower provides recordkeeping and
administrative services to Plan Participants’ retirement plans under an agreement with the plan
sponsor and keeps the records for those plans and their participant accounts. Empower Advisory
and Empower Financial Services are affiliated companies of Empower.

Background

10. Empower describes itself as the nation’s second largest retirement plan
recordkeeper. As of October 2024, Empower served more than 18 million individuals and over
82,000 different retirement plans. This matter focuses exclusively on Empower Advisory’s and
Empower Financial Services’ activities with respect to Plan Participants in Empower’s
Government Markets segment, for whom Empower provided recordkeeping services and who

were advised to enroll in Empower Advisory’s Managed Account service during the Relevant
Period. Empower describes its Government Markets segment as providing retirement plan
services to individuals employed by a state government or political subdivision, or by agencies
or instrumentalities thereof.

11. Certain of the personnel who service the Government Markets Plan Participants
are known as Retirement Plan Advisors. Each Retirement Plan Advisor is an investment adviser
representative with Empower Advisory and a registered representative associated with Empower
Financial Services. Retirement Plan Advisors are responsible for, among other things, providing
one-on-one education to all Plan Participants and personalized retirement advice on investing,
savings strategies, and distributions. This also includes discussing and at times advising Plan
Participants about enrolling their in-plan retirement accounts in Empower Advisory’s Managed
Account service.

12. The Managed Account service is only available to Plan Participants if their plan

sponsor has specifically contracted with Empower Advisory to provide the Managed Account
service. There are multiple ways in which Plan Participants may become enrolled in the
Managed Account service. Using the online account service tools provided by Empower, a Plan
Participant may elect to enroll in the Managed Account service without having contact with a
Retirement Plan Advisor. Or, the Plan Participant may choose to enroll in the Managed Account
service following an interaction with a Retirement Plan Advisor, which would typically be
through a Retirement Readiness Review. A Retirement Readiness Review is a meeting between
the Retirement Plan Advisor and Plan Participant during which the Retirement Plan Advisor
collects detailed information about the Plan Participant’s existing accounts, retirement income
needs, and unique circumstances to provide retirement education and customized investment
advice and recommendations.

Retirement Plan Advisors’ Performance Goals and Compensation

13. Prior to the beginning of each year of the Relevant Period, Government Markets

Retirement Plan Advisors received a document that outlined the yearly performance goals that
would impact their annual compensation. For certain Retirement Plan Advisors, one of their
yearly performance goals during the Relevant Period was the amount of assets that they were
responsible for enrolling in Empower Advisory’s Managed Account service (“Managed Account
AUM Goal”).

14. For those certain Retirement Plan Advisors who received an individual Managed

Account AUM Goal, their respective goals differed based on the territories and/or plans they
serviced. According to the annual goals documents, each of the Retirement Plan Advisors’
performance goals was weighted, and during the Relevant Period, the weight of the Managed
Account AUM Goal for the relevant Retirement Plan Advisors ranged from 25% to 35% of their
total annual performance goal set.

15. A Retirement Plan Advisor’s performance on their annual performance goals,

which was tracked throughout the year, directly impacted their year-end rating, which in turn

impacted their bonus and merit increase, if any, for the year. At the end of each year, the
manager for the Retirement Plan Advisor evaluated the Retirement Plan Advisor’s performance
on the annual performance goals along with other objective standards and subjective qualities
and assigned a year-end performance rating. The manager then used that performance rating to
recommend an appropriate bonus and merit raise, if any, for the Retirement Plan Advisor, with
higher year-end ratings corresponding with higher bonuses and merit raises. The manager’s
recommendations for their Retirement Plan Advisors were then considered by Government
Markets leadership as part of an overall annual calibration process for all Retirement Plan
Advisors.

16. During the Relevant Period, the average Retirement Plan Advisor salary was

approximately $60,000 – $90,000, and the total target bonus amount for Retirement Plan
Advisors was generally set at $11,500, with most Retirement Plan Advisors receiving the target
bonus amount or slightly more or less than the target amount.

17. Under this compensation structure, the Retirement Plan Advisors who performed
well on their annual performance goals, including the Managed Account AUM Goal, where
applicable, typically received higher year-end ratings and were therefore rewarded with larger
bonuses and merit raises. This compensation structure incentivized Retirement Plan Advisors to
enroll Plan Participants in the Managed Account service.

Retirement Readiness Reviews

18. One of the primary responsibilities of a Government Markets Retirement Plan

Advisor was to conduct Retirement Readiness Reviews with Plan Participants. During the
Relevant Period, each Retirement Plan Advisor had a performance goal for the number of
Retirement Readiness Reviews they were expected to conduct each year. The weight assigned to
the Retirement Readiness Review performance goal ranged from 25% to 30% of their total
annual performance goal set.

19. Near the outset of the Retirement Readiness Review, Respondents required

Retirement Plan Advisors to provide the following verbal disclosure to the Plan Participants:

During our call I may be acting in one or both of the following roles: I may act as
a Registered Representative of [Empower Financial Services], a registered broker-
dealer. I may also act in the capacity of an Investment Adviser Representative of
[Empower Advisory], which is a registered investment adviser firm. If at any time
you would like to know in which role I am acting, or if you would like an
explanation of the different roles, please ask me.

20. The Retirement Plan Advisor then asked questions about the Plan Participant’s

investment profile and retirement goals and entered the answers into the Retirement Readiness
Review tool. After entering the Plan Participant’s information, the tool provided a customized
output depicting the Plan Participant’s current projected retirement income versus their projected
retirement income if they were to make changes to their investment strategy/asset allocation.

21. At the conclusion of the Retirement Readiness Review, the Retirement Plan
Advisor was responsible for advising and educating the Plan Participant about the various ways
they could implement the recommended investment strategy/asset allocation generated during
the Retirement Readiness Review, which included: (1) self-managing their retirement account,
(2) investing in a target date fund or using the self-service online advice tool, or (3) enrolling in
Empower Advisory’s Managed Account service, which charges a quarterly advisory fee.

22. During Retirement Readiness Reviews, certain Retirement Plan Advisors

routinely spent a significant amount of time discussing the benefits of the Managed Account
service while only focusing on the drawbacks of self-managing or investing in a target date fund.
In other instances, certain Retirement Plan Advisors discussed only the Managed Account
service with Plan Participants and did not explain that alternative options existed. And in some
instances, Retirement Plan Advisors explicitly recommended the Managed Account service as
the best option for Plan Participants to achieve their desired retirement income goals. For those
Retirement Plan Advisors who had a Managed Account AUM Goal, steering Plan Participants to
enroll in the Managed Account service gave those Retirement Plan Advisors the opportunity to
receive higher bonuses and merit awards.

Retirement Plan Advisors’ Statements to Plan Participants

23. During the Relevant Period, Respondents required Retirement Plan Advisors to

inform Plan Participants they were dually licensed and may be acting in either a brokerage or
advisory capacity during Retirement Readiness Reviews. This dual disclosure, quoted above,
placed the burden on Plan Participants to inquire of the Retirement Plan Advisor in which
capacity they were acting when discussing, advising, or recommending Plan Participants enroll
in the Managed Account service. The disclosure was also made verbally and not in writing as
required under Reg BI. See Exchange Act Rule 15l-1(a)(2)(i).

24. Additionally, during Retirement Readiness Reviews, certain Retirement Plan

Advisors made statements to Plan Participants concerning compensation that were rendered
misleading because the Retirement Plan Advisors did not disclose that they had a financial
incentive to enroll the Plan Participant in the Managed Account service. For example,
throughout the Retirement Readiness Reviews, certain Retirement Plan Advisors routinely told
Plan Participants they were salaried or noncommissioned, acting in a fiduciary capacity, and that
they were acting in the Plan Participant’s best interest. In more egregious cases, Retirement Plan
Advisors even told Plan Participants that their enrollment in the Managed Account service would
not affect the Retirement Plan Advisor’s compensation and that no conflict of interest existed.
These statements assured Plan Participants that Retirement Plan Advisors were providing
disinterested advice that was in the Plan Participants’ best interest when Retirement Plan
Advisors advised Plan Participants to enroll in the Managed Account service. Plan Participants
were not told that certain Retirement Plan Advisors were financially incentivized to enroll Plan
Participants in the service, and neither Empower Advisory nor Empower Financial Services
provided Plan Participants with full and fair disclosure of such conflicts of interest.

Respondents’ Written Disclosures

Empower Advisory’s Disclosures

25. Empower Advisory’s written disclosures did not adequately inform Plan
Participants that certain Retirement Plan Advisors had a financial incentive to enroll them in the
Managed Account service. Therefore, the disclosures did not apprise Plan Participants of the full
nature and extent of the conflict of interest.

26. During the Relevant Period, Empower Advisory had two sets of disclosures
related to conflict of interest: (1) a Form ADV Part 2A Brochure for the Managed Account
service (“MA Service Brochure”) and (2) a Form CRS Customer Relationship Summary (“Form
CRS”), which was available beginning in June 2020.

27. In 2019, Empower Advisory’s MA Service Brochure read: “Some [Empower

Advisory] employees will have an opportunity to earn bonus compensation [emphasis added],
in addition to their salary, for communication, education and/or assisting participants to enroll in
[Empower Advisory’s] Services.”

28. This disclosure was inadequate because it did not fully disclose the conflict of

interest to Plan Participants –– that certain Retirement Plan Advisors were incentivized, with
bonus compensation and merit raises, to enroll Plan Participants in the Managed Account service
over alternative options that were less remunerative for the Retirement Plan Advisors and less
expensive for Plan Participants.

29. In 2020, Empower Advisory slightly revised the MA Service Brochure to read:

“[Empower Advisory] representatives may be indirectly compensated [emphasis added] through
bonus compensation, in addition to their salary, for communication, education and/or assisting
participants to enroll in [Empower Advisory’s] Services.” Additionally, in June 2020, Empower
Advisory added a Form CRS, which included the same language as the 2019 MA Service
Brochure.

30. Empower Advisory’s 2020 disclosures remained inadequate and misleading for

multiple reasons. First, Empower Advisory still did not disclose the full nature of the conflict of
interest to its Plan Participants. Second, the addition of the “may be indirectly compensated”
language minimized the connection between compensation and enrollment in Empower
Advisory’s Managed Account service. In reality, certain Retirement Plan Advisors’
compensation was impacted by their enrollment of Plan Participants in the service. Finally,
Empower Advisory used the term “may,” rather than disclosing that in many instances certain
Retirement Plan Advisors did receive incentive bonus compensation that resulted in the conflict
of interest.

31. In 2021, Empower Advisory updated its MA Service Brochure to include

additional disclosures regarding Retirement Plan Advisors’ incentive compensation. The
updated disclosures stated:

The incentive compensation an [Empower Advisory] representative receives
depends on position type, but generally is calculated based on . . . the achievement
of individual performance goals that consider factors unrelated to an account
holder’s adoption of investment products or services offered through Empower
Retirement.

[Empower Advisory] representatives’ individual performance goals and their
related incentive compensation is based on a combination of factors including the
number and quality of customer engagements during the measurement period and
the amount of customer assets retained as result of the engagements. The rate of
incentive compensation considers the total amount of retained or accumulated
assets, compared with the monthly asset goal, as determined by [Empower
Advisory] on a periodic basis. The asset goal is generally set on an annual basis and
may differ by product or account type. Additional factors include certain qualitative
factors, such as leadership, teamwork, client experience, quality and efficiency of
client interactions, and adherence to corporate policies and regulatory standards.

32. After 2021, Empower Advisory did not make any additional substantive changes
to the conflict of interest disclosure in its MA Service Brochure. Additionally, after 2021, the
only substantive change to Empower Advisory’s Form CRS was in March 2022 when it added a
link to its “Empower Representative Compensation” page on its website.

33. From 2021 through the end of 2022, Empower Advisory’s disclosures remained

inadequate and misleading because although Empower Advisory provided further details about
the incentive compensation, it still failed to inform Plan Participants of the full nature of the
conflict of interest. At no time did Empower Advisory disclose to Plan Participants that
Retirement Plan Advisors were incentivized to enroll them in the Managed Account service over
alternative options that were less remunerative for Retirement Plan Advisors and less expensive
for the Plan Participants.

34. Additionally, Empower Advisory’s representation that the incentive compensation

was calculated based on performance goals that considered “factors unrelated to an account
holder’s adoption of . . . services offered through Empower” was misleading. Although
Empower Advisory considered other factors in its determination of compensation, it failed to
disclose to Plan Participants that for certain Retirement Plan Advisors, the amount of assets a
Retirement Plan Advisor enrolled in the Managed Account service was a factor in calculating
their compensation. Empower Advisory’s references to an “asset goal” and “retained or
accumulated assets” also did not fairly apprise Plan Participants of the existence of a Managed
Account AUM Goal or the impact of that goal on Retirement Plan Advisor compensation.

Empower Financial Services’ Disclosures

35. Empower Financial Services’ written disclosures also did not provide full and fair

disclosure of the material facts relating to the conflict of interest to Plan Participants because the

disclosures did not explain that certain Retirement Plan Advisors were financially incentivized to
enroll Plan Participants in the Managed Account service.

36. During the Relevant Period, Empower Financial Services had two sets of

disclosures related to conflicts of interest: (1) a Regulation Best Interest Disclosure (“Reg BI
Disclosure”), which was available beginning in May 2020 and (2) a Form CRS, which was
available beginning in June 2020.

37. Beginning in May 2020, Empower Financial Services’ Reg BI Disclosure

included the following language:

Our Representatives are generally paid a salary and a variable bonus. The bonus is
based on a combination of the performance of Empower Retirement and its
affiliates and the Representative’s individual performance. In assessing individual
performance, [Empower] may consider quantitative metrics such as the
Representative’s success in gathering, retaining and consolidating client assets.
Asset goals are generally set on an annual basis and may differ by product or
account type. Additional factors include certain qualitative factors, such as
leadership, teamwork, client experience, call quality, call efficiency, and adherence
to Empower Retirement’s policies and regulatory standards.

38. Additionally, beginning in June 2020, in its Form CRS, Empower Financial
Services disclosed:

Some of our representatives who interact with investors may receive incentive
compensation [for] recommending products or services that earn us additional
compensation, such as proprietary products, products that make third-party
payments or products that pay revenue sharing.

39. Empower Financial Services’ Reg BI Disclosure and Form CRS did not satisfy
Reg BI’s Disclosure Obligation because they did not provide full and fair disclosure of the
conflict of interest presented by certain Retirement Plan Advisors who had a Managed Account
AUM Goal and the impact that goal had on their compensation. Empower Financial Services’
disclosure that it “may consider” a Retirement Plan Advisor’s success in “gathering, retaining
and consolidating client assets” when determining the Retirement Plan Advisor’s variable bonus
was misleading for two reasons. First, the use of “may consider” was misleading because
Empower Financial Services did take into consideration a Retirement Plan Advisor’s
performance on the Managed Account AUM Goal when calculating a bonus and merit raise.
Second, the references to gathering client assets and asset goals did not fully and fairly inform
Plan Participants of the Managed Account AUM Goal or the conflict of interest resulting from
the impact that goal had on Retirement Plan Advisors’ compensation.

Website Disclosures

40. In June 2020, as Reg BI’s June 30, 2020 compliance date approached, Empower
added a link to its website’s homepage entitled “Empower Representative Compensation.” The
section entitled “General Compensation Practices” included the following language about
compensation for Empower Advisory’s and Empower Financial Services’ personnel:

Empower employees who interact with individual investors receive a base salary .
. . . Most of these employees are also generally eligible for bonus compensation,
usually paid annually. Bonus compensation depends on a number of factors
including, but not limited to, Empower’s profitability and attainment of the
employee’s performance goals. Goals vary by employee role and individual
employee, and are set based on factors including number of engagements,
engagement quality, investor satisfaction, leadership, teamwork, and adherence to
Empower policies and regulatory standards. Goals do not consider the adoption of
Empower or its affiliates’ products or services by an individual investor, unless
described below.

41. Below that, the section titled “Employee Categories” described “Advisers” (i.e.,

Retirement Plan Advisors) as follows:

These employees meet in-person, online or over the phone with retirement plan
investors and perform more extensive financial counseling and advisory services
than the educational consulting provided from field Education Consultants.
Advisers receive a salary and are eligible for additional compensation described in
the “General Compensation Practices” section. Advisers are eligible to earn bonus
compensation based on the actions that investors take after engagement, including
an investor’s acceptance of a recommendation from the Adviser, retirement plan
enrollments, deferral increases, the diversification of an investor’s investment
strategy in a product neutral manner, and actions to address an investor’s retirement
readiness. Advisers generally have an annual goal for actions taken by the investors
with whom they interact.

42. These additional website disclosures were also inadequate and misleading. The

website’s references that bonus compensation was based on “actions that investors take after
engagement” and that Retirement Plan Advisors had “an annual goal for actions taken by the
investors” did not fully and fairly disclose all material facts relating to the conflict of interest.
The website disclosures did not adequately disclose that certain Retirement Plan Advisors had a
Managed Account AUM Goal or that the goal incentivized them, with compensation, to enroll
Plan Participants in the Managed Account service.

Empower Financial Services’ Conflicts of Interest Policy

43. Empower Financial Services did not establish, maintain, and enforce written

policies and procedures reasonably designed to identify and address the conflict of interest

related to the incentive compensation system, as required by Reg BI’s Conflict of Interest
Obligation. In particular, Empower Financial Services did not establish, maintain and enforce
written policies and procedures reasonably designed to identify and mitigate (i.e., modify
practices to reduce) any conflicts of interest associated with recommendations to retail customers
that create an incentive for its registered representatives to place the interest of the broker-dealer
or the registered representative ahead of the interest of the retail customer.

44. During the Relevant Period, Empower Financial Services’ Conflicts of Interest

Policy explained that “a conflict of interest may exist any time a person or a firm has an
incentive to serve one interest at the expense of another interest or obligation.” The policy
further stated, “Financial compensation has the potential to be a major source for conflicts of
interest. The rewards and incentives that firms offer associated persons may influence their
behavior that, in turn, can be in conflict with a customer’s best interests.”

45. The Conflicts of Interest Policy further provided:

The Firm discloses its material [conflict of interest] to its retail customers via the
[Reg. BI] Disclosures at the time any recommendation is made. The [Reg. BI]
Disclosures includes material conflicts of interest associated with the Firm and its
affiliates, including: investment advice and management services, increased fee
income, proprietary investment funds and insurance products, third-party
payments, and representative compensation.

46. Empower Financial Services’ Conflicts of Interest Policy required conflicts of

interest to be reviewed twice a year by a Conflicts Committee, which would then determine
whether revised disclosures, mitigation, or elimination of such conflicts would be
necessary. The policy further stated that both management and personnel were responsible for
reporting potential conflicts of interest to the compliance department, and that supervisors were
expected to conduct periodic training regarding identification and reporting of potential conflicts
of interest.

47. Empower Financial Services’ written policies and procedures were not reasonably

designed because, despite the periodic review of conflicts of interest, Empower Financial
Services did not take steps to mitigate the conflicts of interest related to certain Retirement Plan
Advisors’ receipt of incentive compensation in connection with their recommendations to Plan
Participants to enroll their in-plan retirement accounts in the Managed Account service.

Violations

48. As a result of the conduct described above, Empower Advisory willfully2 violated

Section 206(2) of the Advisers Act, which prohibits an investment adviser from, directly or

2 “Willfully,” for purposes of imposing relief under Section 15(b) of the Exchange Act and Section 203(e) of
the Advisers Act, “‘means no more than that the person charged with the duty knows what he is doing.’” See
Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes v. SEC, 174 F.2d 969, 977 (D.C. Cir. 1949)).

indirectly, engaging in any transaction, practice, or course of business which operates as a fraud
or deceit upon any client or prospective client.

49. A violation of Section 206(2) of the Advisers Act may rest on a finding of simple

negligence; scienter is not required. SEC v. Steadman, 967 F.2d 636, 643 n. 5 (D.C. Cir. 1992)
(citing SEC v. Capital Gains Research Bureau, Inc., 373 U.S. 180, 195 (1963)); SEC v. Hughes
Capital Corp., 124 F.3d 449, 453–54 (3d Cir. 1997).

50. As a result of the conduct described above, Empower Financial Services willfully

violated Rule 15l-1(a)(1) under the Exchange Act.

Respondents’ Remediation and Cooperation

51. In determining to accept the Offers, the Commission considered the cooperation
provided by Respondents during the Commission’s investigation. Respondents curated and
provided key documents to the Staff, provided multiple voluntary presentations on topics of
significant interest to the Staff, and performed extensive data collection, analysis, and review of
Managed Account enrollment and related fee activity, which was provided to the Staff. The
cooperation substantially advanced the quality and efficiency of the Staff’s investigation and
conserved Commission resources.

52. The Commission also considered the remedial acts undertaken by Empower and

Respondents. These remedial acts include: removal of the Managed Account AUM Goal from
all Retirement Plan Advisor goal sets; the hiring of new compliance professionals at senior levels
with extensive broker-dealer and investment adviser experience; engagement of a third-party
advisory services and consulting firm to assess the design of plan participant-facing activities
and related supervisory and compliance controls and practices; an overhaul of the policies and
procedures and compliance training relating to the Retirement Readiness Review process; the
implementation of an algorithmic decision tool to assist Plan Participants in assessing the value
of the Managed Account service offering; and requiring Retirement Plan Advisors to
affirmatively disclose when they are acting as a representative of Empower Financial Services,
of Empower Advisory, and when they may change roles during a Retirement Readiness Review.

Disgorgement and Civil Penalties

53. The disgorgement and prejudgment interest ordered in paragraph IV.D. is
consistent with equitable principles and does not exceed Empower Advisory’s net profits from
its violations, and will be distributed to harmed investors to the extent feasible. Upon approval
of the distribution final accounting by the Commission, any amounts remaining that are
infeasible to return to investors, and any amounts returned to the Commission in the future that

There is no requirement that the actor “also be aware that he is violating one of the Rules or Acts.” Tager v. SEC,
344 F.2d 5, 8 (2d Cir. 1965). The decision in The Robare Group, Ltd. v. SEC, which construed the term “willfully”
for purposes of a differently structured statutory provision, does not alter that standard. 922 F.3d 468, 478-79 (D.C.
Cir. 2019) (setting forth the showing required to establish that a person has “willfully omit[ted]” material
information from a required disclosure in violation of Section 207 of the Advisers Act).

are infeasible to return to investors, may be transferred by the Commission to the general fund of
the U.S. Treasury, subject to Section 21F(g)(3) of the Exchange Act.

IV.

In view of the foregoing, the Commission deems it appropriate and in the public interest
to impose the sanctions agreed to in Respondents’ Offers.

Accordingly, pursuant to Sections 203(e) and 203(k) of the Advisers Act and Sections
15(b) and 21C of the Exchange Act, it is hereby ORDERED that:

A. Empower Advisory cease and desist from committing or causing any violations
and any future violations of Section 206(2) of the Advisers Act.

B. Empower Financial Services cease and desist from committing or causing any

violations and any future violations of Rule 15l-1(a)(1) promulgated under the Exchange Act.

C. Respondents are censured.

D. Respondents shall pay disgorgement, prejudgment interest, and civil monetary
penalties totaling $5,989,969.94 as follows:

(i) Respondent Empower Advisory shall pay disgorgement of $4,063,569.80,
prejudgment interest of $426,400.14, and a civil monetary penalty in the amount of $750,000,
consistent with the provisions of this Subsection D.

(ii) Respondent Empower Financial Services shall pay a civil monetary
penalty in the amount of $750,000, consistent with the provisions of this Subsection D.

(iii) Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as
amended, a Fair Fund is created for the penalties, disgorgement, and prejudgment interest
described above for distribution to affected Plan Participants. Amounts ordered to be paid as
civil money penalties pursuant to this Order shall be treated as penalties paid to the government
for all purposes, including all tax purposes. To preserve the deterrent effect of the civil penalties,
Respondents agree that in any Related Investor Action, they shall not argue that they are entitled
to, nor shall they benefit by, offset or reduction of any award of compensatory damages by the
amount of any part of Respondents’ payment of civil penalties in this action (“Penalty Offset”).
If the court in any Related Investor Action grants such a Penalty Offset, Respondents agree that
they shall, within 30 days after entry of a final order granting the Penalty Offset, notify the
Commission’s counsel in this action and pay the amount of the Penalty Offset to the Securities
and Exchange Commission. Such a payment shall not be deemed an additional civil penalty and
shall not be deemed to change the amount of the civil penalties imposed in this proceeding. For
purposes of this paragraph, a “Related Investor Action” means a private damages action brought
against Respondents by or on behalf of one or more investors based on substantially the same
facts as alleged in the Order instituted by the Commission in this proceeding.

(iv) Within ten (10) days of the issuance of this Order, Respondents shall
deposit $5,989,969.94 (the “Fair Fund”) into an escrow account at a financial institution not
unacceptable to the Commission staff and Respondents shall provide evidence of such deposit in
a form acceptable to the Commission staff. The account holding the assets of the Fair Fund shall
bear the name and the taxpayer identification number of the Fair Fund. If timely payment into
the escrow account is not made, additional interest shall accrue pursuant to SEC Rule of Practice
600 [17 C.F.R. § 201.600] and/or 31 U.S.C. §3717.

(v) Respondents shall be responsible for administering the Fair Fund and may
hire a professional at their own cost to assist in the administration of the distribution. The costs
and expenses of administering the Fair Fund, including any such professional services, shall be
borne by Respondents and shall not be paid out of the Fair Fund.

(vi) Respondents shall distribute from the Fair Fund an amount representing a
portion of the advisory fees paid to Empower Advisory by Government Markets Plan
Participants, who enrolled in the Managed Account service during the Relevant Period without
adequate disclosure of the conflict of interest presented by the incentive compensation system,
plus reasonable interest from any remaining funds, pursuant to a disbursement calculation (the
“Calculation”) that will be submitted to, reviewed, and approved by the Commission staff in
accordance with this Subsection D. The Calculation shall be subject to a de minimis threshold.
No portion of the Fair Fund shall be paid to any affected Plan Participant account in which
Respondents, or any of their current or former officers or directors, has a financial interest.

(vii) Respondents shall, within ninety (90) days from the date of this Order,
submit a calculation to the Commission staff for review and approval. At or around the time of
submission of the proposed Distribution Calculation to the staff, Respondents shall make
themselves available, and shall require any third-parties or professionals retained by Respondents
to assist in formulating the methodology for their Calculation and/or administration of the
distribution to be available, for a conference call with the Commission staff to explain the
methodology used in preparing the proposed Calculation and its implementation, and to provide
the staff with an opportunity to ask questions. Respondents also shall provide the Commission
staff such additional information and supporting documentation as the Commission staff may
request for the purpose of its review. In the event of one or more objections by the Commission
staff to Respondents’ proposed Calculation or any of their information or supporting
documentation, Respondents shall submit a revised Calculation for the review and approval of
the Commission staff or additional information or supporting documentation within ten (10) days
of the date that the Commission staff notifies Respondents of the objection. The revised
Calculation shall be subject to all of the provisions of this Subsection D.

(viii) Respondents shall, within thirty (30) days of the written approval of the
Calculation by the Commission staff, submit a payment file (the “Payment File”) for review and
acceptance by the Commission staff demonstrating the application of the methodology to each
affected investor. The Payment File should identify, at a minimum, (1) the name of each
affected Plan Participant; (2) the net amount of the payment to be made, less any tax
withholding; (3) the amount of any de minimis threshold to be applied; and (4) the amount of

reasonable interest paid. Respondents shall exclude from the payee file all payments to payees
that appear on the U.S. Treasury Department Specially Designated Nationals List.

(ix) Respondents shall disburse all amounts payable to affected Plan
Participants within ninety (90) days of the date the Commission staff accepts the Payment File,
unless such time period is extended as provided in Paragraph xii of this Subsection D.
Respondents shall notify the Commission staff of the date[s] and the amount paid in the initial
distribution.

(x) If Respondents are unable to distribute or return any portion of the Fair
Fund for any reason, including an inability to locate an affected Plan Participant or a beneficial
owner of an affected Plan Participant or any other factors beyond Respondents’ control,
Respondents shall transfer any such undistributed funds to the Commission for transmittal to the
United States Treasury in accordance with Section 21F(g)(3) of the Exchange Act once the
distribution of funds is complete and before the final accounting provided for in Paragraph xiii of
this Subsection D is submitted to the Commission staff. Payment must be made in one of the
following ways:

a. Respondents may transmit payment electronically to the Commission,

which will provide detailed ACH transfer/Fedwire instructions upon
request;

b. Respondents may make direct payment from a bank account via Pay.gov
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or

c. Respondents may pay by certified check, bank cashier’s check, or United
States postal money order, made payable to the Securities and Exchange
Commission and hand-delivered or mailed to:

Enterprise Services Center
Accounts Receivable Branch
HQ Bldg., Room 181, AMZ-341
6500 South MacArthur Boulevard
Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying Empower
Advisory and Empower Financial Services as Respondents in these proceedings, and the file
number of these proceedings; a copy of the cover letter and check or money order must be sent to
Natalie M. Brunson, Division of Enforcement, Securities and Exchange Commission, 950 East
Paces Ferry Road, N.E. Suite 900, Atlanta, GA 30326-1382.

(xi) A Fair Fund is a Qualified Settlement Fund (“QSF”) under Section
468B(g) of the Internal Revenue Code (“IRC”), 26 U.S.C. §§ 1.468B.1-1.468B.5. Respondents
agree to be responsible for all tax compliance responsibilities associated with the Fair Fund’s
status as a QSF. These responsibilities involve reporting and paying requirements of the Fund,
including but not limited to: (1) tax returns for the Fair Fund; (2) information return reporting

regarding the payments to investors, as required by applicable codes and regulations; and (3)
obligations resulting from compliance with the Foreign Account Tax Compliance Act (FATCA).
Respondents may retain any professional services necessary. The costs and expenses of tax
compliance, including any such professional services, shall be borne by Respondents and shall
not be paid out of the Fair Fund.

(xii) Within one hundred fifty (150) days after Respondents complete the
disbursement of all amounts payable to affected investors, Respondents shall return all
undisbursed funds to the Commission pursuant to the instructions set forth in this Subsection D.
Respondents shall then submit to the Commission staff a final accounting and certification of the
disposition of the Fair Fund for Commission approval, which final accounting and certification
shall include, but not be limited to: (1) the amount paid to each payee, with the reasonable
interest amount, if any, reported separately; (2) the date of each payment; (3) the check number
or other identifier of the money transferred; (4) the amount of any returned payment and the date
received; (5) a description of the efforts to locate a prospective payee whose payment was
returned or to whom payment was not made for any reason; (6) the total amount, if any, to be
forwarded to the Commission for transfer to the United States Treasury; and (7) an affirmation
that Respondents have made payments from the Fair Fund to affected Plan Participants in
accordance with the Calculation approved by the Commission staff. The final accounting and
certification shall be submitted under a cover letter that identifies Respondents and the file
number of these proceedings to Natalie M. Brunson, Assistant Regional Director, Division of
Enforcement, Atlanta Regional Office, Securities and Exchange Commission, 950 East Paces
Ferry Road, N.E. Suite 900, Atlanta, GA 30326-1382. Respondents shall provide any and all
supporting documentation for the accounting and certification to the Commission staff upon its
request and shall cooperate with any additional requests by the Commission staff in connection
with the accounting and certification.

(xiii) The Commission staff may extend any of the procedural dates set forth in
this Subsection D for good cause shown. Deadlines for dates relating to the Fair Fund shall be
counted in calendar days, except if the last day falls on a weekend or federal holiday, the next
business day shall be considered the last day.

By the Commission.

Vanessa A. Countryman
Secretary

UNITED STATES OF AMERICA
In the Matter of
Empower Advisory Group, LLC
Respondents.
Disgorgement and Civil Penalties

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