Shelton investment firm in $125M SEC settlement

Meriden and Shelton investment companies were among nearly 80 firms nationally told to return $125 million to investors following a Securities and Exchange Commission inquiry into whether advisers broke the law by not telling clients that lower cost funds were available for investment.

Infinex Investments of Meriden will pay back investors nearly $1 million and Shelton-based Investmark Advisory Group $100,000. Both firms will also pay to hire administrators to handle the transactions.

Investmark CEO Michael Kusick indicated his company would have comment on the SEC settlement on Wednesday, with Infinex CEO Stephen Amarante not responding immediately to a Hearst Connecticut Media query.

Like other firms in the SEC settlement, Infinex and Investmark did not dispute the SEC’s findings and will not pay any penalties beyond the interest it owed investors.

The SEC is reserving the right to levy sanctions if it determines any parties to the settlement provided misleading information.

In a cease-and-desist order to Infinex, Vanessa Countryman, the acting secretary of the SEC, admonished the firm for “breaches of fiduciary duty and inadequate disclosures” over less than two years through March 2016, while noting Infinex self-reported the violations of SEC rules — which included failing to alert clients of lower-cost mutual funds for their consideration.

The self-report by Infinex was the result of a “Share Class Selection Disclosure Initiative” launched a year ago by the SEC designed to correct what the federal organization deemed as ongoing harm to investors in the sale of mutual fund shares by investment advisers.

Under the SCSD Initiative, the SEC began tracking instances in which financial advisers placed investments in mutual funds that paid them fees to do so, when lower-cost options were available, creating a conflict of interest. The initiative allows the SEC to accept favorable settlement terms for investment advisers that selfreport any potential infractions.

“Investment advisers play a vital and trusted role in our markets,” stated Jay Clayton, chairman of the SEC, in a written statement announcing the crackdown. “Investment advisers are fiduciaries and, as such, their duties of care and loyalty require them to disclose their conflicts of interest, including financial incentives . ... This initiative will have immediate and lasting benefits for Main Street investors.”

Under the slogan “by banks, for banks” and touting low fees it offers as a competitive advantage, Infinex has operated as a brokerdealer since April 1993 under an ownership group numbering some 40 banks, with affiliates including the Savings Bank of Danbury, Fairfield County Bank, First National Bank of Litchfield, Newtown Savings Bank, Milford Bank and Guilford Savings Bank.

In its most recent investment advisory filing with the SEC, Infinex reported having 850 employees under Amarante, with the company’s board of directors chaired by Gerald Noonan, the former head of the Connecticut Bankers Association.

Infinex has 700 clients on whose behalf it invests more than $1 billion in assets. Its client base includes more than 50 charitable organizations, 20 pensions and 80 people it classifies as high net worth. In the past four years, the firm has been censured by regulators in New York and Massachusetts for inadequate oversight of fees and advisers, resulting in settlements totaling $275,000.

Investmark was founded in 1984. The company recently moved its offices to 3 Enterprise Drive in Shelton from Stratford. At last report, the firm employed a dozen people with a client base of about 1,100 accounts and $445 million in assets under management.

Investmark was founded in 1984. The company recently moved its offices to 3 Enterprise Drive in Shelton from Stratford. At last report, the firm employed a dozen people with a client base of about 1,100 accounts and $445 million in assets under management.