On October 26, 2015, National Asset Management, Inc. ("NAM") consented to an Order of the U.S. Securities and Exchange Commission ("SEC") in an administrative proceeding initiated under the Investment Advisers Act of 1940 (Advisers Act"). As described in the Summary section of the Order, the proceeding concerns several disclosure and compliance-related violations and events during the years from 2008 through 2012. The Order found that NAM (1) failed to disclose to advisory clients in writing or obtain client consent to over 21,000 securities trades executed in a principal capacity, (2) failed to report in its SEC filings and timely disclose to clients the disciplinary histories of several of its associated persons, (3) failed to properly enforce its Code of Ethics when its then CEO, several directors, and many of its employees failed to submit hundreds of required reports on their personal securities trading to NAM, (4) failed to adopt and implement compliance policies and procedures reasonably designed to prevent violations of certain provisions of the Advisers Act and the rules thereunder, and (5) failed to conduct one required annual review of its compliance policies and procedures.
NAM agreed to the imposition of a censure, a civil monetary penalty of $200,000, and certain undertakings, including the appointment of an independent compliance consultant to review and make recommendations regarding certain parts of NAM's compliance policies and procedures. The Order did not find an intent to deceive. It did find that NAM refunded to its clients the inappropriately assessed markups and markdowns on the 21,000 trades, took prompt remedial action, and cooperated with the SEC's investigation.