Channing Capital Management, Llc

Allegations: ALLEGED VIOLATION RELATED TO SECTION 206(4) AND RULE 206(4)-7 OF THE INVESTMENT ADVISERS ACT OF 1940. Status: Final Sanction Detail: CHANNING CAPITAL MANAGEMENT LLC ("CHANNING CAPITAL") ENTERED INTO A VOLUNTARY SETTLEMENT RESOLUTION REACHED WITH THE SEC THAT INCLUDED A LIMITED NEGOTIATED CIVIL MONETARY PENALTY FINE OF $50,000, PAID ON DECEMBER 3, 2019. ALSO THE CHANNING CAPITAL AGREED TO A CIVIL REGULATORY CEASE-AND-DESIST ORDER AND RELATED CENSURE. Summary: ON NOVEMBER 22, 2019, CHANNING CAPITAL MANAGEMENT LLC ("CHANNING CAPITAL") ENTERED INTO A VOLUNTARY CONSENT SETTLEMENT WITH THE SEC, WITHOUT ADMITTING OR DENYING ANY SEC FINDINGS, FOR THE PURPOSE OF VOLUNTARILY RESOLVING CLAIMS THAT IT HAD FAILED TO APPROPRIATELY IMPLEMENT ITS TRADE AGGREGATION AND ALLOCATION COMPLIANCE POLICY/PROCEDURE REGARDING A CERTAIN PORTION OF ITS BLOCK TRADES IN VIOLATION OF SECTION 206(4) AND SEC RULE 206(4)-7 UNDER THE INVESTMENT ADVISERS ACT OF 1940. SPECIFICALLY FROM JANUARY 2014 TO JANUARY 2018, CHANNING CAPITAL'S WRITTEN TRADE AGGREGATION AND ALLOCATION POLICIES AND PROCEDURES REQUIRED IT TO ALLOCATE THE TRANSACTION COSTS ASSOCIATED WITH BLOCK TRADES ON A PRO-RATA BASIS AMONGST ALL CLIENTS PARTICIPATING IN THE SAME BLOCK TRADE. A SEPARATE WRITTEN COMPLIANCE POLICY/PROCEDURE (AS PER SEC STANDARDS GOVERNING INVESTMENT PORTFOLIO AND TRADING COMPLIANCE) REQUIRED CHANNING CAPITAL TO FOLLOW THE REQUIREMENTS AND RESTRICTIONS SET FORTH IN EACH CLIENT'S INVESTMENT MANAGEMENT AGREEMENT, INCLUDING CLIENT TRADING-BROKERAGE GUIDELINES AND RESTRICTIONS OR LIMITATIONS PLACED ON TRADING COMMISSIONS OR COMMISSION RATES. 2 OF CHANNING CAPITAL'S THEN 35-45 INSTITUTIONAL CLIENTS PLACED RESTRICTION LIMITATIONS OR CAPS ON THE AMOUNT THEY WERE WILLING TO PAY IN COMMISSION RATES FOR EXECUTION OF THEIR BROKERAGE TRADES. IN ADHERING TO SUCH CLIENTS' RESTRICTIONS, CHANNING CAPITAL ROUTINELY CONVEYED THOSE 2 CLIENTS' COMMISSION CAP RESTRICTIONS TO EXECUTING BROKERS AND REQUESTED THAT SUCH BROKERS ALSO OBSERVE LOWER COMMISSION RATES OF A HALF-CENT TO 1 CENT PER SHARE FOR THOSE 2 CLIENTS WHILE PERMITTING THEM TO PARTICIPATE IN CERTAIN BLOCK TRADES WITH CHANNING CAPITAL'S OTHER INSTITUTIONAL CLIENTS. THIS PRACTICE RESULTED IN 2 CLIENTS WITH A TOTAL OF 4 CLIENT ACCOUNTS PARTICIPATING IN A CERTAIN PORTION OF THE SAME BLOCK TRADES WHILE PAYING DIFFERENTIAL COMMISSION RATES OF A HALF-CENT TO 1 CENT PER SHARE. THIS BLOCK TRADING PRACTICE WAS VOLUNTARILY ENDED AND CEASED AS OF MID-JANUARY 2018 (APPROXIMATELY 2 YEARS AGO), AS CHANNING CAPITAL VOLUNTARILY CHANGED ITS INTERNAL BLOCK TRADING PRACTICES TO AVOID AND ELIMINATE BLOCK TRADES BEING EXECUTED WITH DIFFERENTIAL COMMISSION RATES. IN REACHING THIS SETTLEMENT RESOLUTION, THE SEC ALSO TOOK INTO ACCOUNT THIS VOLUNTARY CORRECTIVE ACTION ALONG WITH THE FIRM'S OTHER VOLUNTARY REMEDIAL STEPS PROMPTLY UNDERTAKEN REGARDING THIS MATTER AND THE VOLUNTARY COOPERATION AFFORDED TO THE SEC STAFF BY THE FIRM. THE KEY TERMS OF THE VOLUNTARY SETTLEMENT RESOLUTION REQUIRED THE FIRM TO PAY A CIVIL PENALTY FINE OF $50,000 AND TO CEASE FROM COMMITTING OR CAUSING ANY FUTURE VIOLATIONS. THE FIRM PAID THE AGREED UPON FINE PROMPTLY AFTER THE SETTLEMENT WAS APPROVED AND FINALIZED BY THE SEC COMMISSION IN WASHINGTON, D.C.