Packerland Brokerage Services, Inc.

Status: Final Sanction Detail: U4 DRP SUBMITTED TO CRD AT THE TIME OF THE EVENT Summary: U4 DRP SUBMITTED TO CRD AT THE TIME OF THE EVENT

Allegations: SEC ADMIN RELEASE 34-82383; IA RELEASE 4832, DECEMBER 21, 2017: 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 THE FIRM. THIS MATTER INVOLVES DISCLOSURE AND BEST EXECUTION FAILURES RELATED TO THE SELECTION OF A PARTICULAR CLASS OF MUTUAL FUND SHARES BY THE FIRM, A DUALLY-REGISTERED INVESTMENT ADVISER AND BROKER-DEALER AND ANOTHER REGISTERED INVESTMENT ADVISER FIRM, IN THEIR CAPACITY AS REGISTERED INVESTMENT ADVISERS. FROM AT LEAST JANUARY 2012 THROUGH DECEMBER 2015, THE FIRM'S INVESTMENT ADVISORY REPRESENTATIVES (IARS) SOLICITED INDIVIDUAL INVESTORS TO USE THE OTHER FIRM AS A THIRD-PARTY MONEY MANAGER AND INVESTMENT ADVISER. THE FIRM'S IARS MET WITH THE CLIENTS AND INFORMED THEM ABOUT THE OTHER FIRM'S TRADING STRATEGIES, INCLUDING WHICH TRADING STRATEGIES WERE MOST SUITABLE AND THE TOTAL AMOUNTS TO BE INVESTED IN EACH STRATEGY. THE FIRM HELPED EACH OF THE CLIENTS FILL OUT AN "INVESTMENT ADVISORY AGREEMENT" WITH THE OTHER FIRM, WHICH DESCRIBED ITS SERVICES, COMPENSATION, AND ITS SOLICITATION ARRANGEMENT WITH THE FIRM. THE FORM ALSO INCLUDED DESCRIPTIONS OF DIFFERENT INVESTMENT STRATEGIES. THE FIRM'S IARS ALSO WORKED WITH THE CLIENTS TO DETERMINE AND FILL IN THE DOLLAR AMOUNTS AND PERCENTAGES OF ASSETS THAT THE CLIENTS DECIDED TO ALLOCATE TO PARTICULAR INVESTMENT STRATEGIES ON THE INVESTMENT ADVISORY AGREEMENT AND SENT IT ON TO THE OTHER FIRM. IN SOLICITING INDIVIDUAL ADVISORY CLIENTS TO INVEST IN MUTUAL FUND STRATEGIES MANAGED BY THE OTHER REGISTERED INVESTMENT ADVISER FIRM, THE FIRM RECOMMENDED THE PURCHASE OF A CERTAIN CLASS OF MUTUAL FUND SHARES THAT IMPOSED A 1 PERCENT ANNUAL SERVICE FEE, WHILE FAILING TO DISCLOSE THAT A LOWER-COST BUT OTHERWISE IDENTICAL SHARE CLASS WAS AVAILABLE. THE FIRM ALSO DID NOT DISCLOSE TO ITS ADVISORY CLIENTS THAT IT HAD A FINANCIAL CONFLICT OF INTEREST BECAUSE, IN ITS CAPACITY AS A BROKER-DEALER, THE FIRM RECEIVED THE ANNUAL SERVICE FEE IMPOSED ON THE HIGHER-COST MUTUAL FUND SHARES. IN ADDITION, THE FIRM'S FORM ADV MISREPRESENTED THAT IT WOULD DISCLOSE TO CLIENTS ALL OF ITS FEES AND ANY COMPENSATION IT RECEIVED FOR THE SALE OF SECURITIES. IN FACT, IT DID NOT DISCLOSE ITS RECEIPT OF THE ANNUAL SERVICE FEE IMPOSED ON THE HIGHER-COST MUTUAL FUND SHARES. THE FIRM, IN ITS CAPACITY AS AN INVESTMENT ADVISER, FAILED TO IMPLEMENT POLICIES OR PROCEDURES REASONABLY DESIGNED TO ADDRESS THE FINANCIAL CONFLICT OF INTEREST ARISING FROM ITS RECEIPT OF THE ANNUAL SERVICE FEE OR THE SELECTION OF MUTUAL FUND SHARE CLASSES. AS A RESULT OF THE CONDUCT DESCRIBED THE FIRM WILLFULLY VIOLATED SECTIONS 206(2), 206(4), AND 207 OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER. Status: Final Sanction Detail: THE FIRM WAS 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 PROMULGATED THEREUNDER; CENSURED; SHALL PAY DISGORGEMENT OF $432,949.80, AND PREJUDGMENT INTEREST OF $23,937, PURSUANT TO THE PROVISIONS IN THE ORDER; SHALL PAY A CIVIL PENALTY OF $80,000, PURSUANT TO THE PROVISIONS IN THE ORDER; AND HAS UNDERTAKEN TO INFORM THEIR CLIENTS OF THIS ORDER WITHIN NINETY DAYS AFTER THE ENTRY OF THIS ORDER. Summary: IN ANTICIPATION OF THE INSTITUTION OF THESE PROCEEDINGS, THE FIRM HAS SUBMITTED AN OFFER OF SETTLEMENT (OFFERS) WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. SOLELY FOR THE PURPOSE OF THESE PROCEEDINGS AND ANY OTHER PROCEEDINGS BROUGHT BY OR ON BEHALF OF THE COMMISSION, OR TO WHICH THE COMMISSION IS A PARTY, AND WITHOUT ADMITTING OR DENYING THE FINDINGS HEREIN, EXCEPT AS TO THE COMMISSION'S JURISDICTION OVER THEM AND THE SUBJECT MATTER OF THESE PROCEEDINGS, WHICH ARE ADMITTED, THE FIRM CONSENT TO THE ENTRY OF THIS ORDER INSTITUTING ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS, PURSUANT TO SECTION 15(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND SECTIONS 203(E) AND 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS AND A CEASE-AND-DESIST ORDER (ORDER). AS A RESULT OF THE CONDUCT DESCRIBED THE FIRM WILLFULLY VIOLATED SECTIONS 206(2), 206(4), AND 207 OF THE ADVISERS ACT AND RULE 206(4)-7 THEREUNDER. IN VIEW OF THE FOREGOING, THE COMMISSION DEEMS IT APPROPRIATE, IN THE PUBLIC INTEREST TO IMPOSE THE SANCTIONS AGREED TO IN THE FIRM'S OFFER. ACCORDINGLY, PURSUANT TO SECTION 15(B) OF THE EXCHANGE ACT AND SECTIONS 203(E) AND 203(K) OF THE ADVISERS ACT, IT IS HEREBY ORDERED THAT THE FIRM 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 PROMULGATED THEREUNDER; CENSURED; SHALL PAY DISGORGEMENT OF $432,949.80, AND PREJUDGMENT INTEREST OF $23,937, PURSUANT TO THE PROVISIONS IN THE ORDER; SHALL PAY A CIVIL PENALTY OF $80,000, PURSUANT TO THE PROVISIONS IN THE ORDER; AND HAS UNDERTAKEN TO INFORM THEIR CLIENTS OF THIS ORDER WITHIN NINETY DAYS AFTER THE ENTRY OF THIS ORDER.