Washington State Regulators Fine Seattle Mother-Son Advisory Team Over Unregistered Activity and Conflict of Interest

A Seattle-area mother and son financial advisory team has found themselves at the center of a regulatory enforcement action, highlighting the stringent requirements governing the operation of registered investment advisors (RIAs) and the critical importance of maintaining clear boundaries regarding supervisory duties and professional licensing.

The case involves WMS Wealth Management, an RIA firm led by Candace Swayne, and her son, William Madison “Bill” Swayne III. Following an investigation by the Washington State Department of Financial Institutions (DFI) Securities Division, the firm and the Swayne family have entered into a consent order to resolve allegations concerning unauthorized account access, the conduct of unregistered advisory activities, and the failure to disclose material conflicts of interest. The resolution, finalized in October, includes a $50,000 fine, an additional $5,000 to cover the costs of the state’s investigation, and an agreement to refund certain fees to affected investors.

The regulatory scrutiny stems from a series of events dating back to January 2021, a period marked by the unique operational challenges of the COVID-19 pandemic. According to the DFI’s findings, Bill Swayne, who at the time was not yet registered as an investment advisor representative (IAR) with his mother’s firm, utilized Candace Swayne’s personal login credentials to access and manage client accounts held on the WMS Wealth platform.

The scope of this activity was significant enough that it drew the attention of the firm’s custodian, TD Ameritrade. In June 2021, the brokerage giant moved to terminate its relationship with WMS Wealth, citing the security and compliance breach resulting from Bill Swayne’s use of his mother’s credentials. The DFI’s consent order highlights that, between January 2021 and April 2022—the month he officially joined WMS Wealth as an investment advisor representative—Bill Swayne was effectively functioning as an unregistered investment advisor.

The regulatory order further details a specific transaction that occurred during this period. While registered with a separate broker-dealer, Integrity Brokerage, Bill Swayne facilitated the sale of interests in a private holding company known as Chelan Ridge Holdings, an entity that eventually acquired a winery. The DFI alleges that in the process of raising $1.25 million from eleven WMS Wealth advisory clients for this investment, Bill Swayne failed to adequately disclose the material conflict of interest inherent in his role. Because Candace Swayne served as the sole owner and operator of WMS Wealth, the state determined that she bore the responsibility for failing to provide the necessary supervision of her son’s activities during this critical timeframe.

When reached by phone to discuss the resolution, Bill Swayne offered a different perspective on the events, characterizing the regulatory findings as a matter of technicalities regarding licensing and trading protocols that were exacerbated by the pressures of the pandemic. He argued that the situation was largely born out of necessity rather than malice.

“Candace was having online access problems, and we provided documents about that, as well as trading reports, but because I was assisting her logging in, they could not reconcile that,” Bill Swayne explained. He maintained that the oversight was a practical response to the administrative hurdles faced by the firm at the time.

Beyond the logistical difficulties of remote work during the height of the health crisis, Swayne suggested that the high performance of the firm’s investment strategies may have drawn a level of scrutiny that would not have been applied under different circumstances. “The state comes down on you in years when you make 40% returns for clients,” Swayne said, suggesting that regulators are often more inclined to look for procedural violations when a firm experiences high-profile success. He emphasized that, despite the regulatory concerns regarding documentation and registration, “there were no losses or damages” sustained by the clients involved in the transactions.

The regulatory landscape for RIAs is notoriously rigid, with strict separation required between personal account credentials and professional advisory duties. The DFI’s position is that such boundaries are not merely "technicalities," but are fundamental to the protection of investors. By utilizing shared credentials, the firm created a scenario where activity within client accounts could not be properly tracked, verified, or attributed to the correct individual, effectively obscuring the audit trail. Furthermore, the failure to disclose conflicts of interest—particularly when a financial advisor is simultaneously managing an RIA firm and raising capital for private ventures—is viewed by regulators as a fundamental breach of fiduciary duty.

The financial penalties levied against the Swaynes are significant, but the firm has sought to move past the investigation by agreeing to the terms of the consent order. In addition to the $55,000 in fines and costs, the firm has committed to compensating investors for certain fees, an action that the Swaynes hope will put the matter to rest. Bill Swayne pointedly noted that the DFI’s cease and desist order contained no allegations of fraud, a distinction he believes is crucial to understanding the nature of the regulatory action.

The case serves as a stark reminder for small, family-run advisory firms of the risks inherent in blurring operational lines. In an industry where compliance is often viewed as the primary barrier to efficient business, the Washington state case illustrates that even well-intentioned attempts to maintain service levels during periods of instability—such as the COVID-19 lockdowns—can result in severe regulatory consequences if those actions fall outside the bounds of established securities law.

As the advisory industry continues to evolve, with more practitioners moving between independent broker-dealers and RIA platforms, the importance of maintaining distinct, transparent, and compliant workflows has never been higher. For the Swaynes, the ordeal has been a costly lesson in the necessity of strict adherence to the letter of the law, regardless of the perceived urgency or the success of the investment outcomes.

The agreement, while resolving the specific charges brought by the Washington DFI, leaves the firm to navigate the reputational challenges that often follow public enforcement actions. As of late 2024, the industry continues to monitor the fallout of such cases, using them as case studies for the dangers of circumventing, even momentarily, the regulatory infrastructure designed to safeguard client capital. Whether the firm’s clients—many of whom have seen the high returns cited by Bill Swayne—will view the regulatory findings as a disqualifying event or as a mere administrative hurdle remains to be seen, but the DFI’s action stands as a firm marker that the state is committed to enforcing the regulations surrounding the conduct of financial advisors, regardless of the firm’s size or its history of performance.

For the broader investment community, the Swayne case is a sobering example of how quickly an advisory firm can be upended by documentation failures. It underscores the reality that in the eyes of regulators, the integrity of the process is every bit as important as the profitability of the portfolios being managed. By formalizing these penalties, the Washington DFI has reaffirmed its role as an active gatekeeper, ensuring that the standards of the Investment Advisers Act of 1940 and state-level securities regulations remain strictly enforced across all advisory practices, large and small.