ADMINISTRATIVE PROCEEDING
File No. 3-19963

September 3, 2020 - The Securities and Exchange Commission today announced settled charges against Illinois-based registered investment adviser Signature Financial Services, Ltd. arising out of its mutual fund share class selection practices.

The SEC's order finds that, from 2014 to 2019, Signature failed to adequately disclose the conflict of interest arising from its selection of mutual fund share classes that charged 12b-1 fees that financially benefitted Signature, instead of lower-cost share classes of the same funds. In addition, the order finds that Signature breached its duty to seek best execution for its clients by causing certain advisory clients to invest in fund share classes that charged 12b-1 fees when 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. According to the SEC's order, Signature also failed to adopt and implement written policies and procedures reasonably designed to prevent these violations. Although Signature did not self-report to the Commission pursuant to the Division of Enforcement's Share Class Selection Disclosure Initiative even though it was eligible to do so, the SEC's order recognizes cooperation afforded the Commission staff and remedial actions promptly undertaken by the firm.

The SEC's order finds that Signature violated the antifraud provisions of Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7 thereunder. Without admitting or denying the findings, Signature consented to cease and desist from violations of these provisions and agreed to an order of disgorgement of $252,460 plus prejudgment interest of $24,120, which will be offset by reimbursements that Signature has already made to clients, and a civil penalty of $80,000.

The SEC's investigation was conducted by Kara M. Washington and supervised by Jeffrey A. Shank of the Asset Management Unit. John Farinacci, an industry expert in the Asset Management Unit, and Kristin L. Dryer, Frank Ronis, and Gena Kusiak in the Chicago Regional Office assisted with the investigation.