Everhart Financial Group Inc

Allegations: SEC ADMIN RELEASE 34-76897/IA RELEASE 4314/JANUARY 14, 2016: THE SECURITIES AND EXCHANGE COMMISSION (COMMISSION) DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HERBY ARE, INSTITUTED PURSUANT TO SECTIONS 203(E), 203(F) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940 (ADVISERS ACT) AND SECTION 15(B)(6) OF THE SECURITIES EXCHANGE ACT OF 1934 AGAINST EVERHART FINANCIAL GROUP, INC. D/B/A EVERHART ADVISORS, AND RICHARD SCOTT EVERHART AND MATTHEW ROMEO AS PRINCIPAL OWNERS OF THE FIRM. SINCE 2010, THE REGISTERED INVESTMENT ADVISER HAS PRINCIPALLY INVESTED ITS CLIENTS IN THE MUTUAL FUND OFFERED BY A SINGLE FAMILY OF MUTUAL FUNDS (THE MUTUAL FUND COMPLEX). THIS MUTUAL FUND COMPLEX OFFERS TWO SHARE CLASSES TO INVESTMENT ADVISERS AND THE ONLY MEANINGFUL DIFFERENCE BETWEEN THEM IS THAT ONE SHARE CLASS CHARGES "12B-1 FEES" AND THE OTHER DOES NOT. DESPITE SIGNIFICANTLY HIGHER FEES, SOME ADVISER REPRESENTATIVES AT THE REGISTERED INVESTMENT ADVISER NEARLY ALWAYS INVESTED NON-RETIREMENT INDIVIDUAL ADVISORY ACCOUNTS IN SHARES THAT CHARGED A 12B-1 FEE, WHICH WAS PAID TO THE REGISTERED INVESTMENT ADVISER'S PRINCIPAL OWNERS WHO WERE LICENSED REGISTERED REPRESENTATIVES OF A REGISTERED BROKER-DEALER. RECEIPT OF 12B-1 FEES NOT ONLY CREATED A CONFLICT OF INTEREST THAT WAS NOT ADEQUATELY DISCLOSED TO THE REGISTERED INVESTMENT ADVISER'S CLIENTS, BUT FAVORING 12B-1 FUNDS OVER OTHERS WAS INCONSISTENT WITH THE REGISTERED INVESTMENT ADVISER'S DUTY TO SEEK BEST EXECUTION FOR ITS CLIENTS. IN ADDITION, THE REGISTERED INVESTMENT ADVISER HAD SEVERAL COMPLIANCE FAILURES, INCLUDING THE LACK OF ANNUAL COMPLIANCE REVIEWS FOR SEVERAL YEARS, AND ALSO ISSUED INSUFFICIENT DISCLOSURES REGARDING THE RECEIPT OF 12B-1 FEES. AS A RESULT, IT WAS DETERMINED BY THE SEC THAT EVERHART FINANCIAL GROUP, INC. D/B/A EVERHART ADVISORS AND RICHARD SCOTT EVERHART AND MATTHEW ROMEO AS PRINCIPAL OWNERS OF THE FIRM, WILLFULLY VIOLATED SECTIONS 206(2) OF THE ADVISERS ACT AND CAUSED VIOLATIONS OF SECTIONS 204 AND 206(4) AND RULES 204-3(A), 204-3(B)(1) AND (2), AND 206(4)-7 THEREUNDER. Status: Final Sanction Detail: DISGORGEMENT/RESTITUTION $201,985.66 MONETARY PENALTY OTHER TAN FINES $23,422.66 SCOTT EVERHART FINED $40,000 MATHEW ROMEO FINED $20,000 Summary: IN DETERMINING TO ACCEPT THE OFFERS, THE COMMISSION CONSIDERED REMEDIAL ACTS PROMPTLY TAKEN BY EVERHART FINANCIAL GROUP, INC. (EFG) FOR THE COOPERATION AFFORDED THE COMMISSION STAFF. EFG MOVED QUICKLY TO ADDRESS THE ISSUES SET FORTH BY THE SEC AND IS PLEASED TO REPORT THAT THE MATERIAL SERVICES TO CLIENTS REMAIN UNAFFECTED BY THIS ORDER. EFG HAS BENEFITED FROM THIS PROCESS TO HAVE A STRONGER COMPLIANCE PROGRAM TODAY DUE TO THE IMPLEMENTATION OF RECOMMENDED CHANGES FROM THE SEC AND INDUSTRY CONSULTANTS.