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January 18, 2023 at 04:31 PM
The Securities and Exchange Commission has ordered National Trust and Fiduciary Services, based in Virginia, to pay nearly $350,000 for failures to disclose 12b-1 fees.
The SEC’s order also requires Glen Armand, NTFS founder and CEO, to pay a $75,000 civil penalty.
The order addresses unregistered broker-dealer activity by NTFS and related material misrepresentations that NTFS and Armand made to their trust customers.
NTFS was a trust company that offered, among other services and products, an online platform to create irrevocable trusts.
From at least January 2015 through December 2018, “to conceal its unregistered brokerage activities, NTFS made it appear that Eastern Point Securities, Inc., a nominee formerly registered broker-dealer wholly owned by NTFS, was accepting and executing the omnibus trading activity of NTFS’s trust assets,” according to the order.
In reality, “NTFS bypassed EPS, in part, by using NTFS’s own personnel and systems to place mutual fund orders directly with EPS’s clearing firm,” the SEC said.
As the nominal broker of record, EPS received approximately $953,643 of transaction-based compensation in the form of 12b-1 fees during the relevant period, the order states, “out of which it routed approximately $764,933 to NTFS after deducting its operational expenses and satisfying its net capital requirements.”
