As part of an initiative to investigate revenue-sharing relationships between advisors and broker-dealers, the SEC enforcement division's asset management unit and the San Francisco regional office have charged a Portland-based advisor for failing to disclose its revenue-sharing payments.
Christopher Keil Hicks
and two companies he owns — Focus Point Solutions
and The H Group
— have agreed to pay a combined $1.1 million to settle the case. They have neither admitted nor denied the charges against them.
The three parties were accused of not disclosing to clients that Focus Point was receiving revenue-sharing payments from a brokerage firm that managed mutual funds being recommended to Focus Point clients.
Focus Point also did not disclose conflicts of interest in the process of seeking approval to have Focus Point added as a subadvisor for the Generations Multi-Strategy Fund
advised by Three G Financial
], which is a part of the Northern Lights Fund Trust
operated by Gemini Fund Services
's call to Hicks were not immediately returned, and Hick's attorney said that he is preparing a statement. It also attempted to contact Ryan M. Long
, who manages the Generations Fund, but he was not available for comment.
Specifically, the SEC alleges that Focus Point did not inform fund trustees that it had a separate payment arrangement with the fund's primary advisor to receive 12(b)(1) fees in addition to fees paid under its subadvisory contract. In addition, the majority of Generations shareholders who voted to have Focus Point retained as a subadvisor were clients of The H Group. According to The H Group's proxy voting policy, the proxies should have been voted by the investors themselves.
View the entire SEC filing regarding the case here. See the fund trust 497-filing with details of the settlement made on September 18.
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