On Investment Management Co

Allegations: THE DIVISION ALLEGES THAT THE O.N. EQUITY SALES COMPANY FAIL TO SUPERVISE FORMER REGISTERED REPRESENTATIVE, JOSHUA RAY ABERNATHY, WHILE HE WAS EMPLOYED BY THEIR FIRM. ABERNATHY MISAPPROPRIATED FUNDS FROM AT LEAST FOURTEEN (14) INVESTORS WHILE EMPLOYED BY THE O.N. EQUITY SALES COMPANY. Status: Final Sanction Detail: THE DIVISION ORDERED THE O.N. EQUITY SALES COMPANY TO PAY $40,000 BACK TO HARMED INVESTORS ON A PRO RATA BASIS. Summary: THE DIVISION ALLEGES THAT THE O.N. EQUITY SALES COMPANY FAILED TO ADEQUATELY MONITOR ABERNATHY'S USE OF HIS PERSONAL EMAIL ACCOUNT TO COMMUNICATE WITH CLIENTS DURING THE TIME HE WAS REGISTERED WITH THE FIRM. THE DIVISION ALSO ALLEGES THAT THE FIRM VIOLATED ITS OWN POLICIES AND PROCEDURES AS RELATED TO CONDUCTING BRANCH OFFICE AUDITS ON NEW BRANCH OFFICES. THE DIVISION ALLEGED THAT IF THE FIRM HAD COMPLIED WITH THESE REQUIREMENTS AND OBLIGATIONS, IT WOULD HAVE DISCOVERED ABERNATHY'S FRAUDULENT ACTIVITIES. AS A RESULT, ABERNATHY WAS ABLE TO SOLICIT AND MISAPPROPRIATE FUNDS FROM AT LEAST 14 INVESTORS WHILE HE WAS EMPLOYED BY FIRM. PRIOR TO THE ENTRY OF THE ORDER, THE O.N. EQUITY SALES COMPANY MADE PAYMENTS TOTALING $469,667 TO HARMED INVESTORS.

Allegations: FOR THE PERIOD FROM 2014 THROUGH MARCH 2017, ONIMCO ADVISED CLIENTS TO PURCHASE OR HOLD MUTUAL FUND SHARE CLASSES THAT PAID 12B-1 FEES TO ONIMCO OR ITS AFFILIATED BROKER-DEALER INSTEAD OF LOWER-COST SHARE CLASSES FOR THE SAME FUNDS FOR WHICH THE CLIENTS WERE ELIGIBLE. THE SEC FURTHER STATED THAT, STARTING NO LATER THAN 2014, ONIMCO RECOMMENDED OR INVESTED FOR ADVISORY CLIENT'S MUTUAL FUNDS OR SHARE CLASSES OR CASH SWEEPS THAT PAID REVENUE SHARING PAYMENTS TO ONIMCO'S AFFILIATED BROKER-DEALER INSTEAD OF LOWER-COST FUNDS OR SHARE CLASSES FOR THE SAME MUTUAL FUNDS OR CASH SWEEPS FOR WHICH THE CLIENTS WERE ELIGIBLE. THE ORDER STATED THAT ONIMCO DID NOT ADEQUATELY DISCLOSE THESE CONFLICTS OF INTEREST, AND THAT THE FAILURE TO DO SO CONSTITUTED BREACHES OF ONIMCO'S FIDUCIARY DUTY, DUTY TO SEEK BEST EXECUTION, OBLIGATION TO MAINTAIN AN EFFECTIVE COMPLIANCE PROGRAM, AND THAT THIS CONDUCT VIOLATED SECTIONS 206(2) AND 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 PROMULGATED THEREUNDER. THE SEC'S ORDER CAN BE FOUND AT HTTPS://WWW.SEC.GOV/LITIGATION/ADMIN/2022/IA-5944.PDF. Status: Final Sanction Detail: THE ORDER, AMONG OTHER THINGS, CENSURED ONIMCO AND ORDERED ONIMCO TO CEASE-AND-DESIST FROM ANY FUTURE VIOLATIONS OF SECTIONS 206(2) AND 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 PROMULGATED THEREUNDER, AND TO PAY $866,257 IN DISGORGEMENT, $162,396 IN PREJUDGMENT INTEREST, AND A $210,000 CIVIL MONETARY PENALTY. PAYMENT IN PROCESS. Summary: THE ORDER, AMONG OTHER THINGS, CENSURED ONIMCO AND ORDERED ONIMCO TO CEASE-AND-DESIST FROM ANY FUTURE VIOLATIONS OF SECTIONS 206(2) AND 206(4) OF THE ADVISERS ACT AND RULE 206(4)-7 PROMULGATED THEREUNDER, AND TO PAY $866,257 IN DISGORGEMENT, $162,396 IN PREJUDGMENT INTEREST, AND A $210,000 CIVIL MONETARY PENALTY. ONIMCO CONSENTED TO ENTRY OF THE ORDER WITHOUT ADMITTING OR DENYING THE SEC'S FINDINGS (EXCEPT AS TO JURISDICTION AND THE SUBJECT MATTER OF THE ACTION, WHICH WAS ADMITTED) AND UNDERTOOK TO: REVIEW DISCLOSURES CONCERNING ITS SELECTION PROCESS FOR MUTUAL FUNDS, SHARE CLASSES, AND CASH SWEEPS; EVALUATE WHETHER TO MOVE CLIENTS TO DIFFERENT MUTUAL FUNDS, SHARE CLASSES, OR CASH SWEEPS; EVALUATE AND REVIEW FOR EFFECTIVENESS ONIMCO'S COMPLIANCE POLICIES AND PROCEDURES; NOTIFY AFFECTED INVESTORS OF THE TERMS OF THE ORDER; AND CERTIFY COMPLIANCE WITH ITS UNDERTAKINGS. PRIOR TO THE ENTRY OF THE ORDER, IN MARCH 2017, ONIMCO BEGAN REBATING 12B-1 FEES TO CLIENTS ON A GOINGFORWARD BASIS. PRIOR TO THE ENTRY OF THE ORDER, ONIMCO AND ITS AFFILIATES IMPLEMENTED REMEDIAL MEASURES INCLUDING CEASING RECEIVING REVENUE SHARING ON CLIENT ADVISORY ASSETS INVESTED IN MUTUAL FUNDS AND TRANSITIONING ITS CASH SWEEP OPTIONS FOR ITS CLIENTS TO MONEY MARKET FUNDS THAT DO NOT PAY REVENUE SHARING TO ONIMCO OR ONIMCO'S AFFILIATES, AS WELL AS REVISING DISCLOSURES AS DESCRIBED IN THE ORDER. THE SEC'S ORDER CAN BE FOUND AT HTTPS://WWW.SEC.GOV/LITIGATION/ADMIN/2022/IA-5944.PDF.