SEC Charges Bolton Securities with Alleged Conflicts of Interest related to 12b-1 Fees
According to a press announcement yesterday, the Securities and Exchange Commission has reportedly charged broker-dealer and registered investment adviser Bolton Securities (Bolton Global Asset Management) with allegedly failing to disclose material conflicts of interest related to 12b-1 fees.
Bolton Securities, based in Bolton, Massachusetts, reportedly invested advisory clients in mutual fund share classes that charged 12b-1 fees, and which had an available share class without 12b-1 fees, according to the complaint.
From August 2014 through at least the end of March 2018, those 12b-1 fees were reportedly paid to the firm’s broker-dealer unit, which in turn allegedly paid some of the fees to the firm’s investment adviser representatives.
The SEC further alleges that from November 2014 through at least March 2019, the firm used the principal trading account of its broker-dealer unit to allegedly engage in self-dealing transactions with its advisory clients that generated principal trading compensation for the broker-dealer, without providing disclosure sufficient for clients to provide informed consent to the conflicted transactions, and purportedly without obtaining required client consent.
The SEC said it is seeking disgorgement of ill-gotten gains, prejudgment interest, financial penalties and permanent injunctions against Bolton Securities.
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