State planning to shut down local investment firms

The Ohio Department of Commerce has issued an order to a prominent local investment adviser stating it intends to suspend his securities license and shut down his investment firms.

The department’s division of securities last month notified Dock Treece, 67, of Sylvania Township-based Treece Financial Services Corp. and Treece Investment Advisory Corp., that it intends to issue a “cease and desist” order, unless Treece requests a hearing at which he could contest the order.

“We are issuing the order to state our intent. But an individual can request a hearing to present their side,” said Kerry Francis, a spokesman for the Department of Commerce. But she added that if the issue is not resolved at the hearing, “the business would stop operating. That is the intent.”

The order states that, as an adviser selling securities, Treece has a duty to inquire about the financial needs of clients and whether the securities he sells them meet those needs. The order alleges that the company — which has about 300 clients but is run solely by Treece and his son, Ben Treece — doesn’t proactively call or meet with clients to discuss their needs other than initial meetings, and nearly all clients’ assets are placed “into the same funds in identical proportions.”

Treece said Monday evening that he has not done anything illegal and that the allegations in the order are without merit. He also said he filed a request last week for a hearing to contest the order. It has not yet been scheduled.

Treece Financial Services and Treece Investment Advisory, according to the state’s order, charge clients processing fees of 0.25 to 0.50 percent of assets. It also receives sales commissions from the various funds it handles.

Between Jan. 1, 2013 and Sept. 30, 2017, the state’s order says, the company billed clients $2.5 million in total advisory fees. It says that Treece and Treece Investment Advisory had $28.9 million in discretionary assets under management from 217 clients as of the end of March.

The state’s order alleges that with one fund, Franklin Class A shares, Treece did not inform an unidentified client that “she would have paid lower fees if she purchased Franklin Advisor shares through an unaffiliated broker-dealer.”

The order alleges that during a meeting with a division examiner, Treece failed to disclose that there were “six complaints” filed against Treece Advisory Corp. during an earlier examination by the Financial Industry Regulatory Authority, which is a non-governmental organization that regulates member brokerage firms and exchange markets.

“Anybody can accuse you of anything. That’s basically what this is,” Treece told The Blade. “I’ve done nothing illegal or criminal but they’ve accused us of violating some rules.

“This is what’s known as a ‘Know your customer rule.’ But there’s a number of things that are just factually incorrect. Those things will come out at the hearing,” he said.

Treece said that state securities division officials haven’t followed their own procedures regarding the process to suspend someone’s license.