An Atlanta investment adviser violated federal securities law when it failed to disclose payments from a hedge fund to which it steered clients -- mostly nonprofit organizations -- the Securities and Exchange Commission announced this week.
Montford Associates and owner Ernest Montford Sr. were ordered to pay $650,000 in penalties, the SEC said in a release, “because Respondents had represented that they did not receive any compensation in connection with giving advice to their clients.”
In addition, Ernest Montford Sr. was barred from associating with any investment adviser.
"The independence of an investment adviser like Montford Associates is critical to the trust investors place in them," William Hicks, the SEC's associate regional director for enforcement, said in a statement. "Undisclosed payments from a recommended hedge fund, like the ones at issue here, compromise that independence and would erode the public’s trust if left unchecked."
Montford’s attorney couldn’t be reached for comment.
Clients that invested in the hedge fund included the Community Foundation for Northeast Georgia, Fieldale Farms, the Georgia Ports Authority, the Savannah Country Day School Foundation, the Sea Island Co. Retirement Plan, St. Joseph’s/Candler Hospital System and the endowment program at Tallulah Falls School.
The SEC decision becomes final unless Montford appeals by May 11.
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