Assetmark, Inc.

Allegations: ON AUGUST 25, 2016, THE SEC ISSUED AN ORDER INSTITUTING CEASE-AND-DESIST PROCEEDINGS PURSUANT TO SECTION 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940. THE SEC ALLEGED THAT ASSETMARK VIOLATED SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-1(A)(5) BY CIRCULATING MISLEADING PERFORMANCE ADVERTISEMENTS CREATED BY F-SQUARED INVESTMENTS, INC. TO PROSPECTIVE CLIENTS CONSIDERING INVESTMENTS IN SEPARATELY MANAGED ACCOUNTS OFFERED BY ASSETMARK AND SUB-ADVISED BY F-SQUARED. THE SEC ALSO ALLEGED THAT ASSETMARK VIOLATED SECTION 204(A) OF THE ADVISERS ACT AND RULE 204-2(A)(16) BY FAILING TO MAINTAIN REQUIRED RECORDS SUBSTANTIATING THE ADVERTISED PERFORMANCE OF F-SQUARED. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS IN THE ORDER, EXCEPT AS TO THE COMMISSION'S JURISDICTION OVER IT AND THE SUBJECT MATTER OF THE PROCEEDINGS, ASSETMARK AGREED TO CONSENT TO (A) CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTIONS 204(A) AND 206(4) OF THE ADVISERS ACT AND RULES 204-2(A)(16) 17(A)(2) AND 206(4)-1(A)(5), AND (B) PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $500,000. ASSETMARK PAID THE CIVIL MONEY PENALTY ON SEPTEMBER 2, 2016. Summary: THIS ACTION WAS PART OF AN ENFORCEMENT SWEEP INVOLVING INVESTMENT ADVISERS MISLED BY PERFORMANCE ADVERTISING CREATED BY F-SQUARED INVESTMENTS, INC. ON AUGUST 25, 2016, THE SEC ANNOUNCED SETTLEMENTS WITH 13 INVESTMENT ADVISERS IN CONNECTION WITH THIS INITIATIVE. THE ASSETMARK ORDER CONTAINED FINDINGS, WHICH ASSETMARK NEITHER ADMITTED NOR DENIED, THAT ASSETMARK VIOLATED SECTION 206(4) OF THE ADVISERS ACT AND RULE 206(4)-1(A)(5) BY ALLOWING ITS STAFF, FROM JULY 2012 THROUGH OCTOBER 2013, TO CIRCULATE TO PROSPECTIVE CLIENTS WHO WERE CONSIDERING A SEPARATELY MANAGED ACCOUNT SERVICE OFFERED BY ASSETMARK AND SUB-ADVISED BY F-SQUARED, PERFORMANCE ADVERTISEMENTS CREATED BY F-SQUARED RELATING TO A DIFFERENT SEPARATELY MANAGED ACCOUNT SERVICE NOT OFFERED BY ASSETMARK AND THAT MISLEADINGLY DESCRIBED THAT DIFFERENT SERVICE'S PERFORMANCE BETWEEN 2001 AND 2008, AND THAT ASSETMARK VIOLATED SECTION 204(A) OF THE ADVISERS ACT AND RULE 204-2(A)(16) BY FAILING TO MAINTAIN RECORDS SUBSTANTIATING THE PERFORMANCE IN THE ADVERTISEMENTS CREATED BY F-SQUARED. ASSETMARK AGREED TO CONSENT TO: (A) CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTIONS 204(A) AND 206(4) OF THE ADVISERS ACT AND RULES 204-2(A)(16) 17(A)(2) AND 206(4)-1(A)(5), AND (B) PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $500,000.

Allegations: THE SEC ISSUED AN ORDER INSTITUTING ADMINISTRATIVE CEASE-AND-DESIST PROCEEDINGS AGAINST ASSETMARK ON 09/26/2023 (THE "ORDER"). THE SEC ALLEGED THAT, FROM AT LEAST SEPTEMBER 2016 THROUGH JANUARY 2021, ASSETMARK FAILED TO FULLY DISCLOSE THAT ASSETMARK AND ASSETMARK'S AFFILIATE ASSETMARK TRUST COMPANY ("ATC") TOGETHER SET THE AMOUNT OF THE PAYMENT THAT ATC WOULD RETAIN AS COMPENSATION FROM THE PAYMENT RECEIVED BY THE BANKS THAT PARTICIPATED IN THE FDIC-INSURED CASH DEPOSIT PROGRAM ("IDC PROGRAM") (THE "ICD PROGRAM FEE"), WHICH, IN TURN, DETERMINED THE AMOUNT THAT WOULD BE DISTRIBUTED AS INTEREST BY THE BANKS TO CLIENTS. THE SEC ALLEGED THAT ASSETMARK HAD FAILED TO FULLY DISCLOSE THE ASSOCIATED CONFLICTS OF INTEREST RELATED TO ITS ROLE IN SETTING THE ICD PROGRAM FEE. THE SEC ALSO ALLEGED THAT ASSETMARK, FROM AT LEAST JANUARY 2016 THROUGH AUGUST 2019, DID NOT FULLY DISCLOSE THE ASSOCIATED CONFLICTS OF INTEREST RELATED TO ASSETMARK'S RECEIPT OF CUSTODIAL SUPPORT PAYMENTS FROM CERTAIN NO-TRANSACTION FEE ("NTF") MUTUAL FUNDS. THESE FAILURES CONSTITUTED BREACHES OF ASSETMARK'S FIDUCIARY DUTY TO ADVISORY CLIENTS. THE SEC ALLEGED THAT ASSETMARK VIOLATED SECTION 206(2) AND 206(4) OF THE ADVISORS ACT AND RULE 206(4)-7 PROMULGATED THEREUNDER. ASSETMARK CONSENTED TO THE ORDER WITHOUT ADMITTING OR DENYING THE SEC'S FINDINGS (EXCEPT AS TO JURISDICTION AND THE SUBJECT MATTER OF THE ACTION, WHICH WAS ADMITTED). Status: Final Sanction Detail: THE SEC, AMONG OTHER THINGS, CENSURED ASSETMARK AND ORDERED ASSETMARK TO: CEASE-AND-DESIST FROM ANY FUTURE VIOLATIONS OF SECTIONS 203(E) AND 203(K) OF THE ADVISERS ACT OF 1940; PAY A $9,500,000.00 CIVIL MONETARY FINE; PAY $ 6,779,138.34 IN DISGORGEMENT AND $2,047,571.23 IN PREJUDGMENT INTEREST TO ASSETMARK INVESTORS AFFECTED BY THE CONDUCT DESCRIBED IN THE ORDER, DESCRIBED IN RESPONSE TO QUESTION 7 ABOVE. Summary: ASSETMARK CONSENTED TO THE ORDER WITHOUT ADMITTING OR DENYING THE SEC'S FINDINGS (EXCEPT AS TO JURISDICTION AND THE SUBJECT MATTER OF THE ACTION, WHICH WAS ADMITTED). THE SEC'S FINDINGS ARE SUMMARIZED IN RESPONSE TO QUESTION 7 ABOVE. IN ACCORDANCE WITH THE SEC'S ORDER, ASSETMARK WILL PAY DISGORGEMENT AND A CIVIL PENALTY AS SUMMARIZED ABOVE.