Harbour Investments, Inc.

Allegations: SEC ADMIN RELEASE 34-84115, IA RELEASE 40-5006 / SEPTEMBER 13, 2018: THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TO SECTION 15(B) OF THE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT") AND SECTIONS 203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940 ("ADVISERS ACT") AGAINST HARBOUR INVESTMENTS, INC. ("HARBOUR" OR "RESPONDENT"). THE COMMISSION FINDS THAT THESE PROCEEDINGS ARISE FROM CERTAIN FAILURES BY REGISTERED INVESTMENT ADVISER HARBOUR. FROM AT LEAST 2012 THROUGH 2016 (THE "PERTINENT PERIOD"), HARBOUR FAILED TO FULLY AND FAIRLY DISCLOSE TO ITS ADVISORY CLIENTS COMPENSATION IT RECEIVED UNDER A MARKETING SERVICES AGREEMENT WITH A THIRD-PARTY BROKER-DEALER ("CUSTODIAN A") THAT PROVIDED CUSTODY AND CLEARING SERVICES TO HARBOUR AND THE CONFLICTS OF INTEREST ARISING FROM THAT COMPENSATION. THIS ARRANGEMENT CREATED INCENTIVES FOR HARBOUR TO FAVOR CUSTODIAN A OVER OTHER CUSTODIANS WHEN GIVING INVESTMENT ADVICE TO ITS ADVISORY CLIENTS ABOUT WHERE TO CUSTODY ASSETS. DURING THE SAME PERIOD, HARBOUR INVESTED SOME OF ITS ADVISORY CLIENTS IN MUTUAL FUND SHARE CLASSES WITH 12B-1 FEES WHEN LOWER COST SHARE CLASSES OF THE SAME FUND WERE AVAILABLE. IN ITS CAPACITY AS A BROKER-DEALER, HARBOUR RECEIVED 12B-1 FEES FROM SOME INVESTMENTS IN THESE SHARE CLASSES, WHICH CREATED A CONFLICT OF INTEREST THAT HARBOUR DID NOT FULLY AND FAIRLY DISCLOSE TO ITS ADVISORY CLIENTS. INVESTING IN A MORE EXPENSIVE SHARE CLASS OVER A LESS EXPENSIVE ONE IN THE SAME FUND WAS ALSO INCONSISTENT WITH HARBOUR'S DUTY TO SEEK BEST EXECUTION FOR ITS ADVISORY CLIENTS. FINALLY, HARBOUR DID NOT IMPLEMENT CERTAIN OF ITS POLICIES AND PROCEDURES DESIGNED TO MANAGE THE ABOVE CONFLICTS. BASED ON THE CONDUCT ALLEGED, HARBOUR VIOLATED SECTIONS 206(2), 206(4) AND 207 OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER. Status: Final Sanction Detail: HARBOUR IS CENSURED AND ORDERED TO CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTIONS 206(2), 206(4), AND 207 OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER. HARBOUR SHALL PAY DISGORGEMENT OF $157,327, PREJUDGMENT INTEREST OF $9,152, AND A CIVIL PENALTY IN THE AMOUNT OF $75,000, FOR A TOTAL OF $241,479. HARBOUR IS ALSO ORDERED TO COMPLY WITH CERTAIN UNDERTAKINGS. Summary: RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT (THE "OFFER") WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. HARBOUR WILLFULLY VIOLATED SECTIONS 206(2), 206(4) AND 207 OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER. IT IS ORDERED THAT HARBOUR IS CENSURED AND SHALL CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTIONS 206(2), 206(4), AND 207 OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER. HARBOUR SHALL PAY DISGORGEMENT OF $157,327, PREJUDGMENT INTEREST OF $9,152, AND A CIVIL PENALTY IN THE AMOUNT OF $75,000, FOR A TOTAL OF $241,479. HARBOUR IS ALSO ORDERED TO COMPLY WITH CERTAIN UNDERTAKINGS.