Fund Sub-Adviser Failed to Disclose Payments from Affiliated Adviser
A mutual fund sub-adviser agreed to pay over $900,000 in disgorgement and penalties for failing to disclose payments received from the fund’s affiliated adviser. The SEC charges that the sub-adviser received 15 basis points from the adviser, which was under common control, even though the sub-adviser told the Board during the 15(c) process that it would not receive any payments other than its sub-advisory fee. The SEC also charged the respondent with failing to disclose to clients revenue sharing payments received for recommending certain third party funds and for voting proxies that economically benefited an affiliate. The respondent agreed to appoint an independent compliance consultant and to disclose the enforcement order to all clients.