Compliance

SEC Charges Oregon Advisor With Failure To Disclose Conflicts Of Interest

Harriet Davies Editor - Family Wealth Report 7 September 2012

SEC Charges Oregon Advisor With Failure To Disclose Conflicts Of Interest

The Securities and Exchange Commission has charged an Oregon-based advisory business and its owner for failing to disclose conflicts of interest and revenue-sharing agreements.

Christopher Keil Hicks and his firms, Focus Point Solutions and The H Group, will pay a $1.1 million settlement after allegedly failing to disclose revenue-sharing agreements with a brokerage firm. Focus Point clients were being recommended mutual funds managed by the brokerage firm while Focus received a percentage of client assets invested in the funds, the SEC says.

The firm neither admitted nor denied the charges.

Focus Point is a registered investment advisor located in Portland, OR, providing investment advice and back-office custodial support to both related and unrelated investment advisory firms. It served as a non-discretionary investment advisor with around $1.7 billion in assets under management, as of December 2011, the SEC's order says. It also serves as the sub-adviser to the $65 million Generations Multi-Strategy Fund, a series of the Northern Lights Fund Trust.

Focus Point also allegedly failed to disclose a conflict of interest while competing to become the Generations fund's sub-advisor. It misrepresented to the trustees of the fund that it would only receive fees paid under the sub-advisory contract while it had an agreement in place with the fund’s primary advisor.

Furthermore, the vast majority of the Generations fund’s trustees were H Group shareholders, creating a conflict of interest as the firm is related to Focus Point, which stood to gain fees from the arrangement.

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