SEC Charges Investment Adviser for Failures Related to Its Share Class Selection Practices

ADMINISTRATIVE PROCEEDING
File No. 3-20161

December 7, 2020 - The Securities and Exchange Commission today announced that BancWest Investment Services, Inc., a dually-registered broker-dealer and investment adviser located in Omaha, Nebraska, agreed to settle charges that it failed to disclose conflicts of interest arising out of its mutual fund share class selection practices.

According to the SEC's order, from at least March 2014 through December 2016, BWIS recommended a third-party model provider that, pursuant to BWIS's clearing agreement with its clearing broker, purchased, recommended, or held for BWIS advisory clients mutual fund share classes that charged 12b-1 and other fees instead of lower-cost share classes of the same funds that were available to clients. The order finds that BWIS made these recommendations without disclosing that it would receive greater compensation from its clients' purchases of the more expensive share classes.

The SEC's order finds that BWIS 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, BWIS consented to cease-and-desist from future violations of these provisions, to be censured, and to pay disgorgement of $286,450 with prejudgment interest of $44,982 and a civil penalty of $75,000.

The SEC's investigation was conducted by Kimberly S. Greer of the Denver Regional Office, and supervised by Ian S. Karpel and Jason Burt. The SEC examination that led to the investigation of BWIS was conducted by Adam Shatek and Craig A. Ellis of the Denver Regional Office and supervised by Nicholas F. Madsen.