Initiated By
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Allegations
IA RELEASE 40-4126; INVESTMENT COMPANY RELEASE 40-31688, JUNE 23, 2015: THE SEC DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TO SECTIONS 203(E), 203(F) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940 AND SECTION 9(B) OF THE INVESTMENT COMPANY ACT OF 1940 AGAINST A REGISTERED INVESTMENT ADVISER, JOSHUA D. STRAUSS, AND TWO INDIVIDUALS. IN ANTICIPATION OF THE INSTITUTION OF THESE PROCEEDINGS, RESPONDENTS HAVE EACH SUBMITTED AN OFFER OF SETTLEMENT WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. SOLELY FOR THE PURPOSE OF THESE PROCEEDINGS AND ANY OTHER PROCEEDINGS BROUGHT BY OR ON BEHALF OF THE COMMISSION, OR TO WHICH THE COMMISSION IS A PARTY, AND WITHOUT ADMITTING OR DENYING THE FINDINGS HEREIN, EXCEPT AS TO THE COMMISSION'S JURISDICTION OVER THEM AND THE SUBJECT MATTER OF THESE PROCEEDINGS, WHICH ARE ADMITTED, AND EXCEPT AS PROVIDED HEREIN, RESPONDENTS CONSENT TO THE ENTRY OF THIS ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, PURSUANT TO SECTIONS 203(E), 203(F) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940, AND SECTION 9(B) OF THE INVESTMENT COMPANY ACT OF 1940, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER. FROM 2011 TO EARLY 2014, THE REGISTERED INVESTMENT ADVISER, STRAUSS, AND ONE OF THE INDIVIDUALS KEPT OR PLACED A SUBSTANTIAL NUMBER OF THEIR CLIENTS IN THE INVESTOR SHARE CLASS OF A MUTUAL FUND MANAGED BY THE FIRM, WHEN THOSE CLIENTS WERE ELIGIBLE FOR THE LESS EXPENSIVE INSTITUTIONAL SHARE CLASS. THE REGISTERED INVESTMENT ADVISER'S CLIENTS PAID AN ADDITIONAL 25 BASIS POINTS IN FEES ON THEIR MUTUAL FUND SHARES BEYOND WHAT THE CLIENTS WOULD HAVE PAID HAD THEY BEEN INVESTED IN THE LESS EXPENSIVE SHARE CLASS. THE REGISTERED INVESTMENT ADVISER RECEIVED THE ADDITIONAL 25 BASIS POINTS IN THE MUTUAL FUND FEES GENERATED BY HAVING ITS CLIENTS IN THE MORE EXPENSIVE SHARE CLASS. BY SELECTING THE LESS ECONOMICAL SHARE CLASS FOR ITS CLIENTS, THE REGISTERED INVESTMENT ADVISER FAILED TO SEEK BEST EXECUTION FOR ITS CLIENTS AND FAILED TO ADEQUATELY DISCLOSE ITS CONFLICT OF INTEREST IN SELECTING A SHARE CLASS FOR CLIENTS THAT WOULD GENERATE MORE FEES FOR THE FIRM. AS A RESULT OF THIS CONDUCT, STRAUSS AND THE INDIVIDUAL CAUSED THE FIRM'S VIOLATIONS OF SECTIONS 206(2) AND 207 OF THE ADVISERS ACT, AND WILLFULLY CAUSED TO BE OMITTED IN REPORTS REQUIRED TO BE FILED WITH THE COMMISSION UNDER THE ADVISERS ACT MATERIAL FACTS REQUIRED TO BE STATED THEREIN.
Resolution
Order
Sanctions
Cease and Desist
Sanctions
Censure
Sanctions
Civil and Administrative Penalty(ies)/Fine(s)
Amount
$45,000.00