SEC Charges Investment Adviser for Failing to Disclose Conflicts of Interest
July 14, 2021
File No. 3-20396
July 14, 2021 - The Securities and Exchange Commission today announced settled charges against Cascade Investment Group, Inc., a dually-registered broker-dealer and investment adviser located in Colorado Springs, Colorado, for failing to disclose conflicts of interest arising out of its mutual fund share class selection practices.
According to the SEC's order, from at least October 2014 through September 2019, Cascade failed to adequately disclose that it was purchasing, recommending, or holding for advisory clients mutual fund share classes that charged 12b-1 fees instead of lower-cost share classes of the same funds. The order also finds that Cascade 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 SEC's order finds that Cascade 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, Cascade consented to cease and desist from future violations of these provisions, to be censured, and to pay a civil penalty of $125,000.
The SEC's investigation was conducted by Michael Cates of the Denver Regional Office, and supervised by Ian S. Karpel and Jason Burt. The SEC examination that led to the investigation of Cascade was conducted by Adam Shatek and Craig A. Ellis of the Denver Regional Office, and supervised by Nicholas F. Madsen.