SEC Obtains Judgments Against P/E Capital and CEO Eliseo Prisno for $2.4 Million in Unauthorized Client Fees

TL;DR

• The SEC obtained final judgments against Chicago-based investment adviser P/E Capital and its CEO Eliseo Prisno for charging 200+ clients approximately $2.4 million in unauthorized, undisclosed fees between 2019 and 2023.
• Prisno allegedly used clients’ login credentials — and rerouted their multi-factor authentication codes — to secretly access brokerage accounts and approve inflated quarterly fees.
• The case is a compliance textbook on what happens when one person serves as both CEO and CCO with zero segregation of duties.

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A Chicago-based investment adviser logged into his clients’ brokerage accounts without their knowledge, rerouted their multi-factor authentication codes to phones he controlled, and then — pretending to be the client — approved inflated quarterly fees on their accounts.

That’s not a hypothetical compliance training scenario. That’s the SEC’s description of what Eliseo Prisno and his firm, P/E Capital Investment Management Partners, allegedly did to more than 200 clients over a four-year period.

On March 31, 2026, the U.S. District Court for the Northern District of Illinois entered final judgments against both Prisno and P/E Capital, settling the SEC’s enforcement action. The judgments permanently enjoin the defendants from violating the antifraud provisions of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, order disgorgement with prejudgment interest and civil penalties (amounts still to be determined by the court), and may permanently bar Prisno from the advisory industry.

What Happened: The Full Picture

The SEC originally filed its complaint on July 3, 2025, laying out a detailed billing fraud scheme spanning February 2019 through July 2023.

Here’s how it worked:

The stated fee vs. the actual fee. P/E Capital’s advisory agreements called for annual fees of 2% to 2.4% of assets under management. Standard enough. But the SEC alleges some client accounts were billed at rates exceeding 7% annually — more than triple what clients agreed to pay.

The credential hijacking scheme. For accounts held at one brokerage, the platform required clients to directly authorize any changes to quarterly fee caps. Rather than getting actual client approval, Prisno and his team allegedly:

1. Logged into clients’ brokerage accounts using credentials they’d created during onboarding
2. Rerouted multi-factor authentication codes to phone numbers under their control
3. Posed as the client to approve elevated quarterly fee caps
4. Submitted both the fee increase request and the client “approval” — often from the same IP address

The scale. The SEC says more than $2.4 million in unauthorized fees were charged to at least 220 client accounts at one brokerage alone. Another $100,000+ in excess fees were billed at a second brokerage, where P/E Capital violated agreed billing frequency by invoicing more often than the 60-day schedule clients had authorized.

The money trail. In total, P/E Capital reportedly collected over $3.3 million in client fees during the period under review. Of that, at least $2.9 million was transferred directly to Prisno’s personal checking account, according to the SEC complaint.

The Fiduciary Duty Breakdown

Investment advisers owe a fiduciary duty to their clients — full stop. That duty is codified in Section 206 of the Investment Advisers Act, which prohibits fraudulent, deceptive, or manipulative conduct by any investment adviser.

Section 206(1) prohibits advisers from employing any device, scheme, or artifice to defraud clients. Section 206(2) prohibits any transaction, practice, or course of business that operates as a fraud or deceit.

What makes the Prisno case stand out isn’t just the dollar amount — it’s the mechanics. This wasn’t a billing error or a vague disclosure failure. The SEC described a deliberate, technically sophisticated scheme to circumvent platform controls designed to protect clients. Hijacking MFA credentials to impersonate clients is a level of premeditation that transforms a fee dispute into what regulators characterize as outright fraud.

Who Were the Victims?

This detail matters: according to the SEC complaint and InvestmentNews reporting, many of P/E Capital’s clients were of Filipino descent, living either in the U.S. or the Philippines. Prisno, a former Merrill Lynch advisor in Cincinnati (2007–2009), founded P/E Capital in 2010 and appears to have built his client base largely within the Filipino community.

The firm was small — roughly $20.5 million in AUM with 120 clients as of January 2025, down from $40.5 million and 150 clients in July 2021. The declining numbers suggest some clients may have discovered the overcharges and left before the SEC took action.

Targeting a specific immigrant community adds a layer of vulnerability. Clients who are less familiar with U.S. brokerage platforms, who may have language barriers, or who trust an adviser from their own community are less likely to scrutinize fee statements — and the SEC’s allegations suggest this trust was exploited.

The CEO-as-CCO Problem

One detail in the SEC complaint that every compliance professional should circle in red: Eliseo Prisno served as both CEO and Chief Compliance Officer of P/E Capital.

This is a compliance structure that screams conflict of interest, and regulators know it. When the person responsible for generating revenue is also the person responsible for policing that revenue generation, the compliance function isn’t independent — it’s decorative.

The SEC has repeatedly flagged single-person compliance structures in enforcement actions. A 2025 Sidley Austin review of SEC enforcement trends noted that 27% of SEC enforcement allegations in FY2025 targeted investment advisers and investment companies, with compliance program deficiencies — including inadequate segregation of duties — as a recurring theme.

For small RIAs that genuinely can’t afford a separate CCO, the SEC has acknowledged that reality but still expects meaningful independence in the compliance function. At minimum, that means:

• Written compliance policies that are actually followed — not just filed
• Regular independent reviews by an outside compliance consultant
• A compliance calendar with documented testing, reviews, and certifications
• Fee billing audits with reconciliation against advisory agreements
• Escalation procedures that don’t route through the same person being monitored

What This Means for the Industry

Fee Billing Controls Are Under the Microscope

The SEC’s examination priorities have consistently highlighted billing practices for investment advisers. After cases like P/E Capital, expect examiners to dig deeper into:

Control Area	What Examiners Look For
Fee calculation methodology	Do actual fees match advisory agreements? Are billing rates documented and reconciled?
Client authorization	Are fee changes authorized directly by clients? Are authorization records maintained?
Credential management	Who has access to client account credentials? Are access logs reviewed?
Segregation of duties	Is fee billing separated from fee approval and reconciliation?
Billing exception reports	Are anomalies (rates above agreement, frequency changes) flagged automatically?
Independent review	Does someone outside the billing chain review fee accuracy quarterly?

MFA Circumvention Is a Red Flag Beyond Billing

The credential hijacking described in the SEC’s complaint isn’t just a billing fraud technique — it’s a cybersecurity and identity theft concern. Firms that allow advisers to retain client login credentials after onboarding are creating the exact conditions for this kind of abuse.

Best practices for credential hygiene in advisory firms:

1. Never retain client platform credentials. Once an account is set up, clients should change passwords and own their MFA devices exclusively.
2. Implement session monitoring on any platform where advisers interact with client accounts. Same-IP-address fee requests and approvals should trigger automatic alerts.
3. Require dual authorization for any fee changes — one person requests, a different person (ideally compliance or operations) approves.
4. Conduct quarterly fee reconciliation comparing billed amounts against advisory agreements, with exception reporting for any variance above a defined threshold.

The Small RIA Compliance Gap

P/E Capital managed roughly $20–40 million in AUM — a small firm by any measure. Small RIAs face a genuine tension: compliance infrastructure costs money they often don’t have, but regulatory expectations don’t scale down with AUM.

That said, the controls that would have prevented or detected this scheme aren’t expensive:

• Quarterly fee reconciliation spreadsheet comparing billed vs. agreed rates: $0 (just discipline)
• Annual compliance review by an outside consultant: $3,000–$10,000
• Separate CCO or outsourced CCO arrangement: $5,000–$25,000/year
• Automated billing exception alerts from most custodial platforms: often included in platform fees

Compare those costs to $2.4 million in disgorgement, civil penalties, and a permanent industry bar. The math isn’t hard.

So What? Your Action Items

This case is a checklist-ready reminder for every advisory firm — but especially small and mid-size RIAs:

1. Audit your fee billing today. Pull three months of fee statements and reconcile them against advisory agreements. If you can’t explain every charge, you have a problem.

2. Review credential access. Does anyone at your firm have — or could they obtain — client login credentials for brokerage platforms? If yes, that’s a control gap. Close it.

3. Separate the CEO from the CCO. If budget is the issue, engage an outsourced CCO for annual reviews and targeted testing. The appearance of independence matters almost as much as actual independence.

4. Document everything. Fee methodologies, billing calculations, client authorizations, compliance reviews — if it’s not written down, it didn’t happen in the eyes of a regulator.

5. Watch for the pattern. Fee fraud typically escalates gradually. Start with small overcharges, test whether anyone notices, then scale. Trending analysis on fee rates over time catches this before it becomes a $2.4 million problem.

The SEC’s message here is consistent and clear: fiduciary duty isn’t aspirational language — it’s an enforceable obligation with real consequences. When you charge clients fees they didn’t agree to using credentials they didn’t share, you’ve crossed every line the Investment Advisers Act draws.

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FAQ

What did P/E Capital and Eliseo Prisno do wrong?

The SEC alleges that between 2019 and 2023, P/E Capital and its CEO Eliseo Prisno charged more than 200 advisory clients approximately $2.4 million in unauthorized, undisclosed quarterly fees. They allegedly accessed client brokerage accounts using client login credentials without consent — including rerouting multi-factor authentication codes — to approve inflated fee caps. The court entered final judgments on March 31, 2026, permanently enjoining both defendants from violating the antifraud provisions of the Investment Advisers Act.

What are Sections 206(1) and 206(2) of the Investment Advisers Act?

Section 206 of the Investment Advisers Act of 1940 is the primary antifraud provision governing investment advisers. Section 206(1) prohibits advisers from using any device, scheme, or artifice to defraud clients. Section 206(2) prohibits any transaction, practice, or course of business that operates as a fraud or deceit upon clients. These provisions establish the fiduciary duty that every registered investment adviser owes to its clients and form the basis for most SEC enforcement actions against advisers.

How can investment advisers prevent unauthorized fee billing?

Key controls include: quarterly fee reconciliation comparing billed amounts against advisory agreements, dual-authorization requirements for any fee changes, immediate credential handover to clients after account onboarding (never retaining client login information), automated billing exception reports that flag rates above agreed thresholds, and an independent compliance function that reviews fee accuracy — ideally someone other than the firm’s revenue-generating principals.