In one proposed change, the SEC would expand an existing rule to ensure funds labeled ESG invest at least 80% of their assets in a way that lines up with that strategy.

According to the commission, TradeZero publicly told investors it refused its clearing broker’s demands to restrict trading, when in fact it stopped trading certain stocks.

The charges come as investment advisors increasingly use ESG metrics to appeal to investors, according to SEC Enforcement Division Deputy Director Sanjay Wadhwa.

President Melanie Senter Lubin said the rule would offer state regulators additional means to take action against registrants that don't pay up.

SEC Enforcement Division Director Gurbir S. Grewal said the enforcement action indicated that 'AML obligations are sacrosanct' for registrants.

The SEC claims the RIA violated its fiduciary duty when it did not inform clients about the conflicts related to revenue-sharing agreements and must return funds to affected investors.

The Fifth Circuit Court of Appeals agreed that Congress unconstitutionally delegated its power when it allowed the SEC to pick whether to pursue enforcement cases in federal courts or internally.

The SEC chair told the House Appropriations Committee he would use the additional funds to keep pace with growing number of RIAs, scrutinize broker/dealers' Reg BI compliance, and get back to in-person examinations.