In the Matter of Harbour Investments Inc.
Admin. Proc. File No. 3-18760
On September 13, 2018, the Commission instituted and simultaneously settled administrative and cease-and-desist proceedings (the “Order”) against Harbour Investments Inc. (“Harbour”). The Commission found that, from at least 2012 through 2016, Harbour failed to adequately disclose compensation it received under a marketing services agreement with a third-party broker-dealer that provided custody and clearing services to Harbour, and the conflicts of interest arising from that compensation. In addition, Harbour failed to adequately disclose compensation it received for investing some of its clients in mutual fund share classes with 12b-1 fees when lower cost share classes of the same fund were available, and the conflicts of interest arising from that compensation. Investing in a more expensive share class over a less expensive one in the same fund was also inconsistent with Harbour’s duty to seek best execution for its advisory clients. Finally, Harbour failed to implement certain of its policies and procedures designed to manage the above conflicts.
The Commission ordered Harbour to pay a total of $241,479.00 in disgorgement, prejudgment interest, and a civil money penalty. The Commission also created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, so the civil money penalty, along with the disgorgement and prejudgment interest, can be distributed to those harmed by Harbour’s conduct described in the Order (the “Fair Fund”).
The Order provides for Harbour to deposit the Fair Fund into an escrow account acceptable to the Commission staff. Harbour is responsible for distributing the Fair Fund in accordance with the Order. Tax compliance and any related administrative expenses are the responsibility of Harbour. The Order requires that Harbour submits to the Commission staff a final accounting and certification of the disposition of the Fair Fund within 150 days of effectuating the completion of the distribution. See the Commission’s Order: Release No. 34-84115.
For more information, please contact the Commission:
Office of Distributions