SEC settles charges against Zoe Financial for conflict-of-interest disclosures

The Securities and Exchange Commission issued a settlement order on Sept. 28, 2026 against New York-based Zoe Financial Inc. for willful violations of Section 206(2) of the Investment Advisers Act of 1940. The order requires Zoe Financial to cease the practices at issue and imposes a civil monetary penalty.

Zoe Financial operated a referral service that used an algorithm to match third-party investment advisers with individuals seeking adviser recommendations. Salespeople followed up with prospects who did not schedule a meeting and often suggested additional advisers beyond the algorithm's matches. In January 2023 the firm launched Zoe Wealth, offering sub-advisory services, account onboarding assistance, and back-office support to advisers in its network, creating a financial incentive for advisers to use the service.

The SEC found that Zoe Financial failed to fully and fairly disclose the resulting conflict of interest in its Form ADV Brochure until December 2024. Although the firm disclosed that certain advisory firms held indirect minority interests, it did not accurately describe how it mitigated that conflict.

Without admitting the findings, Zoe Financial agreed to a cease-and-desist order, a censure, and to pay a $450,000 civil monetary penalty. The order also acknowledges remedial steps taken, including revisions to the compliance manual and the hiring of an in-house chief compliance officer.

The settlement binds Zoe Financial, its network of advisers, and any clients or prospective clients who receive recommendations through the firm's referral service, which must now adhere to the updated disclosure and compliance requirements.