NPB Financial Group, a hybrid registered investment advisor and broker/dealer, has settled charges with the Securities and Exchange Commission, which claimed the firm sold mutual fund share classes to advisory clients that charged 12b-1 fees, even though less expensive alternatives were available. The firm failed to disclose the conflicts to clients, the SEC says.
Burbank, Calif.-based NPB has agreed to pay approximately $1 million in disgorgement, prejudgment interest and penalties.
In addition, NPB failed to self-report the violations via the commission’s Share Class Selection Disclosure Initiative. That program was announced in 2018 and offered firms with undisclosed conflicts of interest in their selection of mutual fund share classes a chance to self-report and avoid strong penalties.
“To meet this fiduciary obligation, NPB was required to provide its advisory clients with full and fair disclosure that is sufficiently specific so that they could understand the conflicts of interest concerning NPB’s advice about investing in different classes of mutual funds and could have an informed basis on which they could consent to or reject the conflicts,” the SEC order said.
NPB did not respond to a request for comment.