ADMINISTRATIVE PROCEEDING
File No. 3-20081

September 25, 2020 - The Securities and Exchange Commission today announced that Creative Financial Designs, Inc., a registered investment adviser located in Kokomo, Indiana, agreed to settle charges that it failed to disclose conflicts of interest arising out of its mutual fund share class selection practices and revenue sharing agreements entered into by Creative's affiliated broker-dealer, cfd Investments, Inc.

According to the SEC's order, from at least January 2014 through March 2019, Creative failed to adequately disclose that it was purchasing, recommending, or holding for advisory clients mutual fund share classes that charged 12b-1 fees that benefitted cfd Investments and Creative's investment adviser representatives in their capacity as registered representatives of cfd Investments, instead of lower-cost share classes of the same funds. The order also finds that Creative breached its duty to seek best execution for those transactions by causing certain advisory clients to invest in mutual fund share classes that charged 12b-1 fees when other share classes of the same funds that presented a more favorable value for these clients under the particular circumstances in place at the time of the transactions were available to the clients. The order further finds that Creative failed to disclose compensation that cfd Investments received through revenue sharing agreements with two third-party broker-dealers and conflicts arising from that compensation.

The SEC's order finds that Creative violated Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7 thereunder. Without admitting or denying the SEC's findings, Creative consented to cease and desist from future violations of these provisions, to be censured, and to pay disgorgement of $569,516 plus prejudgment interest of $108,424 and a civil penalty of $212,300.

The SEC's investigation was conducted by Kimberly S. Greer of the Denver Regional Office, and supervised by Ian S. Karpel and Jason Burt.