Snowden Lane Pays $360,000 Over Margin-Fee Disclosures

The New York RIA did not tell clients its broker-dealer marked up margin interest rates and swept clearing-firm compensation from cash balances for five years.

By the Family Office Real Estate Daily Desk·Monday, November 2, 2026·2 min read

Editorial summary of reporting byWealthManagement.com Our editorial standards →

The answer · checked against WealthManagement.com

Why did the SEC fine Snowden Lane Partners and how much did Snowden Lane pay to settle?

Snowden Lane Partners, a New York-based RIA managing $15 billion in assets, agreed to pay more than $360,000 in disgorgement, interest, and penalties to settle SEC charges. From at least February 2018 through March 2023, Snowden Lane did not disclose that its affiliated broker-dealer marked up margin interest rates and swept clearing-firm compensation from client cash balances. The firm also used a hedge clause the SEC found inconsistent with fiduciary duty, and did not admit the SEC's findings.

Key facts

Snowden Lane Partners agreed to pay more than $360,000 in disgorgement, interest, and penalties to resolve SEC charges, according to the SEC's order.
From at least February 2018 through March 2023, Snowden Lane did not disclose to advisory clients that its affiliated broker-dealer was marking up margin interest rates and collecting those markups as compensation from its clearing firm, according to the SEC.
From February 2018 through June 2020, Snowden Capital failed to provide full and fair disclosure about revenue its affiliated broker-dealer earned from its clearing firm based on advisory clients' assets held in cash sweep money market funds, according to the SEC.
Starting in July 2019, Snowden Lane used a hedge clause in client advisory agreements that the SEC found inconsistent with an investment advisor's fiduciary duty because it risked misleading retail clients about legal rights that cannot be waived.
Snowden Lane adopted internal written policies in June 2023 explicitly prohibiting the use of hedge clauses likely to mislead clients, but did not revise existing client agreements to remove the problematic language, according to the SEC's order.
A Snowden Lane spokesperson said the matter stemmed from a routine SEC examination in 2022 and that clients did not experience investment losses.

Snowden Lane Pays $360,000 Over Margin-Fee Disclosures — Image: editorial illustration · Story sourced from WealthManagement.com

Snowden Lane Partners, a New York registered investment advisor with $15 billion in assets under management, agreed to pay more than $360,000 to resolve Securities and Exchange Commission findings that the firm breached its fiduciary duty to retail clients. The firm did not admit the SEC's findings but consented to disgorgement, interest and civil penalties.

The SEC order states that from at least February 2018 through March 2023, Snowden Lane did not disclose to its advisory clients that its affiliated broker-dealer was marking up margin interest rates on client accounts and collecting those markups as compensation from its clearing firm. Some of the brokerage customers affected were also the firm's advisory clients, meaning the RIA had an undisclosed financial incentive tied to its own clients' margin balances, the SEC said. The firm never disclosed the actual or potential conflicts of interest this arrangement created, the order states.

The order also addresses a second, overlapping period. From February 2018 through June 2020, regulators found that Snowden Lane failed to provide full and fair disclosure about a separate conflict of interest. Its affiliated broker-dealer earned revenue from its clearing firm based on advisory clients' assets held in cash sweep money market funds, the SEC said.

Beyond the compensation disclosures, the SEC took issue with language embedded in Snowden Lane's client agreements. Starting in July 2019, the firm used a hedge clause in its advisory agreements that purported to limit its liability to clients. The SEC found that the clause's language was inconsistent with an investment advisor's fiduciary duty because it risked misleading retail clients into believing they could not exercise certain legal rights that, in fact, cannot be waived.

The order states that Snowden Lane adopted internal written policies in June 2023 explicitly prohibiting the use of hedge clauses likely to mislead clients about the firm's liability. Despite adopting that policy, the firm did not revise its existing client agreements to remove the problematic language.

A Snowden Lane spokesperson said the matter stemmed from a routine SEC examination in 2022 and concerned the adequacy of certain disclosures, not a failure to disclose. The spokesperson said clients received disclosures regarding the compensation arrangements at issue and experienced no investment losses. The firm updated the relevant disclosures and advisory agreement language following the initial examination, the spokesperson said. As part of the settlement, the RIA also consented to a cease-and-desist order and a formal censure.

The Deployment Angle

Family Office Real Estate Daily Desk · our analysis, not the source's

Family offices using multi-service wealth platforms should audit how affiliated entities share revenue. When an RIA's broker-dealer collects clearing-firm compensation tied to client margin balances or cash sweeps, the economic incentive sits with the firm, not the client. Request a full fee-stack disclosure that names every compensation channel—margin markups, sweep revenue, soft-dollar arrangements—and quantify each as basis points of assets or dollars per account.

The five-year non-disclosure window in this case ran through a period when cash yields rose sharply. If a family office held material cash in sweep accounts during 2022 and 2023, the undisclosed revenue share could have been tens of thousands of dollars on a $50 million portfolio. Ask the advisor to reconstruct the actual margin and sweep charges paid, then compare them to the rates the clearing firm charged the broker-dealer. The delta is the undisclosed markup.

Hedge clauses that limit advisor liability remain common in RIA agreements. The SEC's position is that language purporting to waive fiduciary duties or limit statutory rights is misleading even if unenforceable. Family offices should strike any clause that says the advisor is not liable for losses except in cases of willful misconduct or gross negligence. Standard negligence and breach-of-duty claims must remain available, and the agreement should say so explicitly.

Questions this story answers

01What did the SEC find that Snowden Lane Partners did wrong?

The SEC found that Snowden Lane Partners breached its fiduciary duty to retail clients over more than five years by not disclosing that its affiliated broker-dealer marked up margin interest rates and collected clearing-firm compensation from client cash sweep balances. The SEC also found that Snowden Lane used a hedge clause in client agreements inconsistent with an investment advisor's fiduciary duty.

02How much did Snowden Lane pay to settle the SEC charges?

Snowden Lane Partners agreed to pay more than $360,000 in disgorgement, interest, and penalties. As part of the settlement, the firm also consented to a cease-and-desist order and a formal censure. Snowden Lane did not admit the SEC's findings.

03How long did the undisclosed margin markup arrangement at Snowden Lane last?

According to the SEC's order, the undisclosed margin interest markup arrangement ran from at least February 2018 through March 2023, a period of more than five years. The separate undisclosed cash sweep revenue conflict ran from February 2018 through June 2020.

04What is the hedge clause issue in the Snowden Lane SEC settlement?

Starting in July 2019, Snowden Lane included a hedge clause in its advisory agreements purporting to limit its liability to clients. The SEC found this language risked misleading retail clients into believing they could not exercise certain legal rights that cannot in fact be waived. Snowden Lane adopted a policy against such clauses in June 2023 but did not revise existing client agreements to remove the language.

05Did Snowden Lane's clients lose money as a result of these disclosure failures?

According to a Snowden Lane spokesperson, clients did not experience investment losses. The spokesperson also said the SEC's order acknowledges that clients received disclosures regarding the compensation arrangements at issue, and that the firm updated relevant disclosures and advisory agreement language following the initial examination in 2022.

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WealthManagement.com

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