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Commitments and Contingencies
6 Months Ended
Jun. 30, 2025
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
In the ordinary course of business, the Company from time to time enters into contracts containing indemnification obligations of the Company. These obligations may require the Company to make payments to another party upon the occurrence of certain events including the failure by the Company to meet its performance obligations under the contract. These contractual indemnification provisions are often standard contractual terms of the nature customarily found in the type of contracts entered into by the Company. In many cases, there are no stated or notional amounts included in the indemnification provisions. There are no amounts reflected on the Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 related to these indemnifications.
Brunner Claims
As the Company reported in prior filings with the Securities and Exchange Commission (the “Commission”), on May 17, 2020, M.J. Brunner, one of the Company's third-party developers/vendors that provided development services and application management for two of the Company's client applications (“Brunner”) experienced a ransomware attack. On May 27, 2025, the Company entered into a confidential settlement agreement and mutual general release of claims agreement with Brunner resolving the disputes between the parties to SEI’s satisfaction.
Rubicon Wealth Management
Also, as the Company reported in prior filings with the Commission, on May 1, 2024, SEI Private Trust Company (SPTC), a wholly-owned, operating subsidiary of SEI, terminated its client relationship with Rubicon Wealth Management LLC, an SPTC investment advisor client (Rubicon). SPTC terminated the Rubicon relationship due to suspicions of fraudulent activity by Rubicon’s founder, Scott Mason.
On June 25, 2025, Mr. Mason was sentenced to 97 months in prison, followed by three years of supervised release. Mason was also ordered to pay nearly $25,000 in restitution to his victims and more than $2,300 in back taxes to the
Internal Revenue Service. The sentencing follows Mason’s guilty plea earlier this year to charges including wire fraud, securities fraud, investment advisor fraud, and five counts of filing false tax returns. Mason also pleaded guilty to various Securities and Exchange Commission violations and has been permanently barred from working in the securities industry.
As previously disclosed, eight separate suits were filed against SPTC in its capacity as custodian for the Rubicon accounts of the plaintiffs (collectively, the Plaintiffs). These actions were filed in the Court of Common Pleas of Montgomery County, Pennsylvania and allege several different claims, including breach of contract, breach of fiduciary duty, negligence, violation of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (UTPCPL), and aiding and abetting tortious conduct by SPTC in connection with certain transfers of Plaintiffs’ assets from SPTC custodial accounts to bank accounts of Orchard Park. Orchard Park was created and controlled by Mason, and Mason withdrew the funds from Orchard Park’s accounts and used them for his own personal purposes. Certain of these claims have since been dismissed by the court.
On May 21, 2025, five of the previously filed cases, James A. Byrne & Sharon Byrne vs. SEI Private Trust Company, Case No. 2024-20612; Melody Pettinelli & Melody Pettinelli as Trustee of the Donald Pettinelli Trust dated 11/7/1996 vs. SEI Private Trust Company, Case No. 2024-21377; Norman Love vs. SEI Private Trust Company, Case No. 2024-21361; Stephen Red & Carla Red vs. SEI Private Trust Company, Case No. 2024-21902; and Jonathan Klein & Sara Klein vs. SEI Private Trust Company, Case No. 2024-23294, were voluntarily dismissed immediately following the filing of a suit joining each of those five Plaintiffs from the dismissed cases as joint plaintiffs in one new suit, Norman Love, Melody Pettinelli (individually and as Trustee of the Donald Pettinelli Trust dated 11/07/1996), James Byrne and Sharon Byrne, Stephen Red and Carla Red, and Jonathan Klein and Sara Klein vs. SEI Private Trust Company, Case No. 2025-14324. And, on May 15, 2025, one additional lawsuit against SPTC was filed by John Connolly, Mark O’Connor and Melissa Kiefer in their capacity as Trustees of the Melissa Hannah Murray 1996 Trust, the Melissa Hannah Murray 1997 Trust, the Molly Sara Murray 1996 Trust, and the Molly Sara Murray 1997 Trust, Case No. 2025-10900. The claims made in these two suits are substantially similar to the allegations made in the suits previously disclosed. Along with the suits reported in previous filings that have not been voluntarily dismissed and these two cases, there are five suits pending against SPTC (collectively, the Rubicon Actions).
While the Rubicon Actions are in their early stages and the ultimate outcomes of these litigations remain uncertain, SPTC intends to vigorously defend each of the Rubicon Actions. Currently, SPTC estimates that the aggregate amount of Rubicon client assets transferred at the direction of Mr. Mason from SPTC custodial accounts to Orchard Park bank accounts is approximately $15,000. In the event that SPTC is unsuccessful in its defense of the Rubicon Actions, SEI does not currently believe that the losses associated with such unsuccessful defense would exceed the approximately $15,000 of Rubicon client assets that Mr. Mason directed to be transferred to Orchard Park.
United Kingdom Financial Conduct Authority Supervisory Review of SEI Investments (Europe) Limited
On July 31, 2024, SEI Investments (Europe) Limited (SIEL), an indirectly, wholly-owned operating subsidiary of SEI, received a final requirement notice from the Financial Conduct Authority of the United Kingdom (the FCA) under section 166(3)(a) of the Financial Services and Markets Act 2000 (FSMA), requiring SIEL to engage a “Skilled Person” to undertake a two-stage review of SIEL’s governance arrangements and control environment. In the first stage, the Skilled Person is to provide SIEL and the FCA with a report setting out the Skilled Person’s view of the effectiveness of the control environment and governance arrangements with respect to key risks, as well as the Skilled Person’s recommendations where necessary to address any identified weaknesses (the Section 166 Report). In the second stage, the Skilled Person is to provide an independent view of the quality and completeness of the remediation carried out by SIEL to address any findings from the initial stage and any self-identified weaknesses, including a view on SIEL’s compliance with relevant regulations. The appointment of a Skilled Person is one of the regulatory tools used by the FCA to supervise and monitor firms it regulates. A Skilled Person is an independent third-party expert with the relevant knowledge and experience to undertake a review as described above. This is not an enforcement action nor an investigation but an action taken as part of its supervisory oversight.
In August 2024, SIEL, with the approval of FCA, appointed the firm of Grant Thornton to act as the Skilled Person.
On December 16, 2024, Grant Thornton delivered the first stage of its Skilled Person Report in which it concluded, in summary, that SIEL has an established corporate governance framework and risk management framework that it considered to be appropriate in design for the relative size and complexity of its activities. The Skilled Person Report did however make a number of recommendations for improvements in its governance arrangements with its U.S. parent, and with respect to SIEL’s three lines of defense: resourcing of control functions, strategy and culture.
To provide the necessary assurance to the FCA of SIEL’s focus on addressing the recommendations and concerns, on February 26, 2025, SIEL voluntarily applied to the FCA under section 55L(5)(a) FSMA for the imposition by the FCA of requirements on its regulatory permission (“Voluntary Requirement” / “VREQ”). From February 26, 2025, onwards, SIEL may not, without the FCA’s prior written consent:
enter into new client agreements (contracts) where a material change in SIEL’s existing suite of propositions, systems or services is required or where significant senior management engagement would be needed; and
launch a new proposition, product or service that is not already offered by SIEL.
The VREQ does not prevent SIEL from on-boarding new clients where this does not result in significant new service requirements or significant senior management engagement.
The VREQ currently imposed on SIEL is reflected in full on the FCA Register.
SIEL is fully committed to addressing the concerns raised by the FCA. The Company believes the actions SIEL is taking to remediate the issues identified in the Skilled Person Report will not only strengthen its business but also help maintain its focus on achieving positive customer outcomes, positioning SIEL for sustainable future growth.
SIEL management believes that the remediation actions currently underway will appropriately address the recommendations made by the Skilled Person and concerns articulated by the FCA in respect of the issues identified by the Skilled Person. SIEL’s remediation actions will be reviewed by the Skilled Person as part of the second stage of their engagement.
The VREQ will stay in effect unless and until varied or cancelled by the FCA (either on the application of SIEL or of the FCA’s own volition), until the FCA is satisfied that SIEL has demonstrated that it has addressed the concerns the FCA has communicated to it.
Other Matters
The Company and certain of its subsidiaries are party to various other examinations, investigations, actions and claims arising in the normal course of business that the Company does not believe are material. The Company believes that the ultimate resolution of these matters will not have a material adverse effect on the Company's financial position or the manner in which the Company conducts its business. Currently, the Company does not believe the amount of losses associated with these matters can be estimated. While the Company does not believe that the amount of such losses will, when liquidated or estimable, be material to its financial position, the assumptions may be incorrect and any such loss could have a material adverse effect on the Company's results of operations or the manner in which the Company conducts its business in the period(s) during which the underlying matters are resolved.
Unfunded Commitments to Limited Partnership Funds
The Company has unfunded commitments of $9,951 at June 30, 2025 to limited partnership funds.