Zoe Financial Settles SEC Charges Over Referral Conflicts for $450,000

The U.S. Securities and Exchange Commission on September 28, 2026, announced settled charges against New York-based registered investment adviser Zoe Financial Inc. for failing to fully and fairly disclose material facts concerning conflicts of interest to its clients and prospective clients. 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, according to the SEC’s announcement.

The proceeding was instituted under Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 and is designated Release No. IA-7019, File No. 3-22758. The Commission’s order defines the period at issue, approximately January 2023 through December 2024, as the Relevant Period and describes the conduct as breaches of fiduciary duty.

Zoe Financial is a Delaware corporation based in New York, New York, and has been registered with the Commission as an investment adviser since December 2019, according to the order. In its annual Form ADV update filed March 30, 2026, the firm reported 1,689 advisory clients and approximately $284 million in regulatory assets under management, and separately reported providing advisory services to 20,538 clients for whom it had no regulatory assets under management.

Referral Service and the Zoe Wealth Platform

The order states that Zoe Financial launched in approximately February 2018 as a referral service matching individuals seeking an investment adviser with advisers in its network. Network advisers signed agreements requiring them to pay Zoe Financial a portion of the advisory fees collected from referred clients who ultimately retained them. During the Relevant Period, the number of advisers in the network ranged between approximately 128 and 225.

Matches were generated by an algorithm. Individuals completed a questionnaire on Zoe Financial’s website covering age, financial goals, types and amounts of assets owned, location, and income, and the algorithm assessed those responses against network advisers and delivered ranked matches on screen and by email. The process did not end with the algorithm, however. Zoe Financial salespeople typically followed up with individuals who had not scheduled a meeting with one of their matches and, in those conversations, often recommended additional advisers. During the Relevant Period, clients hired a network adviser who was not among the algorithm’s initial matches approximately 46% of the time, according to the order, and salespeople were not provided with specific guidance or training on factors that could or could not be considered as part of that process.

In approximately January 2023, Zoe Financial launched Zoe Wealth, a turnkey asset management platform through which it offers sub-advisory services, account onboarding assistance, and other back-office support to network advisers. When Zoe Wealth launched, and for part of the Relevant Period, Zoe Financial charged advisers an additional platform fee. The order finds that, for part of the Relevant Period, Zoe Financial received additional fees from investment advisers when clients it referred were onboarded to the Zoe Wealth platform, and that the firm benefited more generally from growing Zoe Wealth because more clients and more assets on the platform increased Zoe Financial’s enterprise value. As a result, the order finds, Zoe Financial had an incentive to refer clients to advisers that used Zoe Wealth and would onboard their clients to the platform.

The order states that internal communications showed Zoe Financial was focused throughout the Relevant Period on growing Zoe Wealth, increasing the number of network advisers using it, and increasing total assets on it, and that employees linked platform adoption to additional referrals in conversations with network advisers and advisers considering joining the network. One former Zoe Financial vice president told an adviser that he would not “call it a quid pro quo, but obviously the firms that are using Zoe Wealth are just going to get more referrals,” according to the order. As the Relevant Period went on, the order finds, Zoe Financial began telling advisers they would be removed from the referral network if they would not adopt Zoe Wealth, and by the end of 2024 it had separated from most of the advisers that would not use the platform. Although the algorithm did not take into account whether an adviser used Zoe Wealth, the order finds the referral process was not limited to the algorithm because salespeople often became involved and on many occasions suggested advisers the algorithm had not initially recommended.

Disclosure Timeline and Sanctions

From the launch of Zoe Wealth until October 28, 2024, Zoe Financial’s Form ADV brochures for its referral program did not mention Zoe Wealth or any corresponding conflict, the order finds. On October 28, 2024, the firm filed a revised brochure stating that it reserved the right to require advisers to use Zoe Wealth and to maintain a cumulative minimum account value at the platform in order to be included in the referral program. The order finds that update did not disclose Zoe Financial’s financial interest in such a requirement or the underlying conflict of interest. On December 30, 2024, Zoe Financial filed a brochure that specifically referred to the conflict, stating that it had an incentive to refer users to investment advisers that utilize the Zoe Wealth platform because doing so was in its financial interest.

The order also addresses a separate conflict disclosure. Certain registered investment advisory firms hold indirect minority interests in Zoe Financial, and those firms and their affiliates also participate in the referral network. Zoe Financial disclosed that the ownership interests created a conflict of interest, but the order finds it described its mitigation of that conflict in a misleading way, stating that it referred potential clients to advisers solely based on their answers to questions during the onboarding process and that it gave no preferential treatment on the number of referrals sent to advisers with an ownership interest. That description was misleading, the order finds, because once salespeople became involved, as they often did, referrals could be based on any number of factors and could have been impacted by a range of conflicts or incentives, including the equity interests. Zoe Financial has since removed or otherwise revised the language from its disclosure materials.

As a result of the conduct, the order finds Zoe Financial willfully violated Section 206(2) of the Advisers Act, which prohibits an investment adviser, directly or indirectly, from engaging in any transaction, practice, or course of business that operates as a fraud or deceit upon any client or prospective client. The order states that scienter is not required to establish a violation of Section 206(2), which may rest on a finding of simple negligence, citing the U.S. Court of Appeals for the D.C. Circuit’s decision in SEC v. Steadman.

“Investment advisers have a fiduciary obligation to fully and fairly disclose material conflicts of interest,” Sheldon Pollock, Associate Director of the SEC’s New York Regional Office, said in the announcement. “Advisers must live up to those disclosure obligations in all aspects of their advisory services, including when they offer a new technology or new feature to their clients.”

In determining to accept Zoe Financial’s settlement offer, the Commission considered remedial measures the firm undertook, including revisions to portions of its compliance manual governing interactions between salespeople and clients to make clear that salespeople were not to provide their own recommendations to clients, and the hiring of a full-time, in-house chief compliance officer.

The order requires Zoe Financial to cease and desist from committing or causing any violations and any future violations of Section 206(2), censures the firm, and directs payment of the $450,000 civil money penalty to the Commission within 14 days of the order’s entry for transfer to the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If timely payment is not made, additional interest accrues under 31 U.S.C. § 3717. The order further provides that the penalty is to be treated as a penalty paid to the government for all purposes, including tax purposes, and that in any related private damages action based on substantially the same facts, Zoe Financial will not argue for or benefit from an offset of compensatory damages by the amount of any part of its penalty payment.