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Investment Adviser Settles SEC Charges for Fee and Conflicts Disclosure Violations

An investment adviser settled SEC charges for breach of fiduciary duty in connection with its affiliates' receipt of third-party compensation, particularly Rule 12b-1 fees, related to the sale of shares in mutual funds.

The SEC alleged that the adviser failed to disclose material facts to its clients, who, therefore, did not have sufficient information to consent to the conflicts presented.

The SEC charged the adviser with violations under Investment Advisers Act Section 206 ("Prohibited transactions by investment advisers").

To settle the SEC charges, the investment adviser agreed to (i) cease and desist from violating SEC rules, (ii) a censure, (iii) pay disgorgement, prejudgment interest and civil monetary penalties totaling $1,238,653, and (iv) comply with certain undertakings.

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Rule 12b-1 Fees
Regulated Entities: 
Body of Law: