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Bank of Montreal pays $38m to settle US SEC charges

Published : Sunday, 29 September, 2019 at 12:00 AM  Count : 628

Sept 28: Two units of Bank of Montreal agreed to pay about $38 million to settle U.S. regulatory charges they concealed conflicts of interests by failing to tell clients their money was often being invested in expensive, in-house funds.
The U.S. Securities and Exchange Commission on Friday said BMO Harris Financial Advisors and BMO Asset Management, both based in Chicago, will pay an $8.25 million civil fine plus $29.73 million of disgorgement and interest, with money used to compensate harmed investors.
"BMO advisers repeatedly put their own financial interests ahead of clients," C. Dabney O'Riordan, co-chief of the SEC enforcement division's asset management unit, said in a statement.
A spokeswoman for BMO said the bank was pleased to settle, and has improved its processes to identify, address and disclose conflicts of interest. The company did not admit or deny wrongdoing in agreeing to settle.
The SEC has long focused on conflicts of interest when financial advisers select mutual funds for clients, and brought many cases over alleged failures to disclose those conflicts.
According to the SEC, the BMO units failed to disclose that from July 2012 to March 2016, they invested about 50% of client assets in their retail Managed Asset Allocation Program in proprietary mutual funds.
The regulator said this resulted in higher management fees for BMO Asset Management, which managed the funds.
It also said BMO Harris Financial Advisors would invest client assets from the program in higher-cost share classes, when they were eligible for lower-cost share classes.

The program had $2.7 billion of assets under management as of March 31, 2016, of which $1.4 billion were in proprietary funds, the SEC     said.    -Reuters

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