By Chuck Epstein
The Securities and Exchange Commission
has fined four employees of Missouri-based SignalPoint Asset Management $215,000 for failing to disclose conflicts of interest to their clients.
The four were identified as principals John W. Handy Jr., Jonathan C. Timson, Dennis R. Walker and comptroller Michael J. Orzel.
The SEC said the principals provided brokerage and advisory services as both registered representatives and investment adviser representatives of a dually registered broker-dealer and investment adviser. During 2007 and early-2008, the SEC said, Handy, Timson and Walker sought permission from the dual registrant to form and own a separate investment advisory firm.
But after the dual registrant denied their ownership request in August 2008, Handy, Timson and Walker formed and registered SAM by selecting three nominee owners to act as SAM’s majority members. The three men then provided all initial capital for SAM and engaged in other financial dealings with SAM and its members that “evidenced their control over the firm,” the SEC said.
From the formation of SAM in August 2008 through at least 2013, the three also controlled SAM by actively participating in its operations and directing its management and policies. However, in advising some of their advisory clients to invest with SAM, the three failed to mention their control of SAM and the conflicts of interest associated with their capitalization of and potential receipt of profits from SAM.
In addition, the SEC said the RIA failed to disclose the principals as control persons and disguised Orzel’s role as chief compliance officer. He was also responsible for drafting and filing the firm’s ADV forms. ADVs are the documents used by investment advisers to register with both the SEC and state securities authorities.
SignalPoint Asset Management, headquartered in Springfield, Missouri, serves as an investment adviser to more than 1,800 separately managed accounts. The firm has combined assets under management of approximately $5 million, according to the SEC.
The SEC earlier this year said its 2014 examination priorities would include further investigations into conflicts of interest.
Originally published on BenefitsPro.com