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SEC fines 2 Bank of Montreal units over conflicts of interest disclosures

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SEC fines 2 Bank of Montreal units over conflicts of interest disclosures

The U.S. Securities and Exchange Commission said BMO Harris Financial Advisors Inc. and BMO Asset Management Corp. agreed to pay more than $37 million to settle charges over their alleged failure to tell clients about certain aspects of how the companies selected investments in their retail investment advisory program.

The SEC found that the program, known as the Managed Asset Allocation Program, or MAAP, included the selection of more expensive investments from which the BMO advisers profited. Among other things, the regulator claimed that the Bank of Montreal units preferred mutual funds managed by BMO Asset Management and invested approximately 50% of MAAP client assets in proprietary funds. The practice resulted in payment of additional management fees to BMO Asset Management, however, the SEC's order found that neither BMO advisers disclosed this practice or the associated conflict of interest to clients.

Without admitting or denying the SEC's findings, BMO Harris and BMO Asset Management agreed to pay disgorgement and prejudgment interest of $29.7 million and $8.3 million in civil penalty, and to cease and desist from committing or causing any future violations of the Investment Advisers Act.