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Rating:A Fund-of-ETF Shop's Trust Discloses a Wells Notice Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, June 18, 2012

A Fund-of-ETF Shop's Trust Discloses a Wells Notice

Reported by Chris Cumming

On Friday, MFWire reported that the Northern Lights Fund Trust received a Wells Notice from the SEC on May 30. The issue revolves around what one source told MFWire is a relatively minor issue at a series that is part of the Northern Lights Fund Trust which is offered through Gemini Fund Services.

A second, separate disclosure was made last week for a mutual fund that is part of the TOPS Funds, a group of ETFs managed by Akron, Ohio-based ValMark Advisers. The disclosure states that they are now part of the Northern Lights Variable Trust.

Yet an external spokesperson representing Gemini insisted that "any reference to TOPS' receipt of a Wells Notice is factually inaccurate."

In a revision to its prospectus filed with the SEC on June 14, the TOPS mutual fund trustees disclosed that "the Trust and certain of its current and former trustees and former chief compliance officer ... received a Wells Notice from the staff of the U.S. Securities and Exchange Commission."

That wording is similar to the disclosure made last week by the Northern Lights Fund Trust.

The amended prospectus further states that the Wells Notice "relates primarily to the process by which certain investment advisory agreements between the Trust (on behalf of a small number of funds in the Trust) and their advisers were approved, and the disclosures regarding the same."

According to the revised prospectus, the notice also cited books and records violations. The prospectus states that the recipients dispute the charges and are working with the SEC to resolve the matter.

The Seattle office of Milliman, an investment consulting firm, is the subadvisor to the TOPS series of funds, providing risk-management services.

MFWire could not immediately reach spokespeople for Milliman in Seattle or ValMark for comment for this story.

The TOPS mutual fund appears to be the only series of the Northern Lights Fund Trust that disclosed that its trust received a Wells Notice. The TOPS mutual funds are not included in a list of Northern Lights Fund Trust mutual fund clients available through the distributor's website.

A Wells Notice is a disclosure that the SEC is considering bringing charges related to the violation of federal securities laws. 

Correction: This article has been updated to reflect comments and input from an external spokesperson representing Gemini Fund Services.

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