SEC Reaches Settlement with Investment Adviser Regarding Recapture of Waived Fees and Reimbursed Expenses from Money Market Funds

October 9, 2020

The SEC reached a settlement with a registered investment adviser (Adviser) for making material misrepresentations regarding the expenses paid by four money market funds (Funds) that the Adviser managed, in connection with fund reimbursement of fees and expenses that the Adviser had waived or reimbursed during the period from January 2016 through February 2019. The Adviser omitted the reimbursement of fees and expenses from a description of the annual operating expenses in the Funds’ prospectuses, thereby materially misstating the expenses that investors paid when buying and holding shares of the Funds.

The SEC’s order (Order) found that the Adviser violated Section 206(4) of the Investment Advisers Act of 1940 and Rules 206(4)-7 and 206(4)-8 thereunder and Section 34(b) of the Investment Company Act of 1940. Without admitting or denying the findings in the Order, the Adviser agreed to a cease-and-desist order, a censure, and to pay disgorgement and prejudgment interest of approximately $5.9 million to be disbursed to affected investors in the Funds. The Order noted that the SEC did not impose a civil penalty, based on the Adviser’s voluntary self-reporting of its conduct and subsequent cooperation in the matter.

The Order is available at https://www.sec.gov/litigation/admin/2020/ia-5599.pdf.


Categories

Compliance, Enforcement Actions, Investment Advisers, Investment Companies, Mutual Funds, Regulatory