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Two mutual funds, trustees settle SEC charges over disclosures
May 2, 2013 / 4:00 PM / in 5 years

Two mutual funds, trustees settle SEC charges over disclosures

WASHINGTON, May 2 (Reuters) - A pair of mutual funds and their trustees have settled civil charges alleging they had provided misleading disclosures to investors, in a case that stems from an ongoing crackdown by U.S. securities regulators into fee arrangements in the fund industry.

Trustees of Northern Lights Fund Trust and the Northern Lights Variable Trust misrepresented or omitted factors before approving investment advisory contracts, the Securities and Exchange Commission said on Thursday.

The SEC’s enforcement action is the product of an ongoing broader look by the agency’s asset management investigative unit, which has been closely looking into the advisory contract renewal process and fee arrangements in the fund industry.

The funds’ administrator, Gemini Fund Services, and its compliance firm, Northern Lights Compliance Services, neither admitted nor denied the charges, but agreed to each pay a $50,000 penalty.

The firms and the trustees also agreed to engage an independent compliance consultant to address the violations the SEC identified, the agency said.

“Determining the terms of the investment advisory contract, especially compensation of the adviser, is one of the most critical duties of a mutual fund board,” George Canellos, who co-leads the SEC’s enforcement division.

“We cooperated fully with the SEC in this inquiry, and are pleased that the matter has now been resolved,” said James Moyle, a lawyer for the firms and the trustees.

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