Northern Lights Compliance Services (NLCS) and Gemini Fund Services (GFS) were found guilty by the US market watchdog for violating its compliance rule and the investment company act recordkeeping and reporting provisions, respectively.
The malpractices came into light, when some of the trusts’ shareholder reported misrepresentation of information and omission of certain factors when reaching decisions on behalf of the funds and their shareholders.
SEC enforcement division asset management unit deputy chief Marshall Sprung said that these violations underlines that turnkey mutual fund arrangements can pose significant governance concerns.
He further said that the "trustees must be vigilant in ensuring that the funds they oversee meet their disclosure, compliance, reporting, and recordkeeping obligations."
The five trustees named in the SEC enforcement action include Michael Miola of Arizona, Lester M Bryan of Utah, Anthony J Hertl of Florida, Gary W Lanzen of Nevada, and Mark H Taylor of Ohio.
GFS and NLCS have neither accepted nor denied the SEC charges, but each agreed to reimburse $50,000 penalties, and the firms and trustees agreed to engage an independent compliance consultant to address the violations found in the SEC’s order.
