SEC charges Bolton Securities with failing to disclose 12b-1 fee conflicts

Agency says firm also engaged in self-dealing transactions that profited firm's reps

Nov 7, 2019 @ 11:03 am

By InvestmentNews

The Securities and Exchange Commission has charged Bolton Securities, a Bolton, Mass.-based registered investment adviser and broker-dealer doing business as Bolton Global Asset Management, with failing to disclose material conflicts of interest related to 12b-1 fees.

According to the SEC's complaint, Bolton invested advisory clients in mutual fund share classes that charged 12b-1 fees, and which had an available share class without 12b-1 fees. From August 2014 through at least the end of March 2018, those 12b-1 fees were paid to the firm's broker-dealer unit, which in turn paid some of the fees to Bolton Securities' investment adviser representatives.

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In addition, the SEC alleges that from November 2014 through at least March 2019, Bolton Securities used the principal trading account of its broker-dealer unit to 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 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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