St. Germain Investment Management pays $1.9 million in conflict of interest case


SPRINGFIELD — St. Germain Investment Management paid $1.9 million in restitution — a word for forgone profits — prejudgment interest and civil penalties last year when St. Germain settled a conflict of interest complaint filed by the United States Securities and Exchange Commission.

That includes $1.4 million returned to investors last year, according to the SEC.

The case involved St. Germain’s breach of its fiduciary duty to advisory clients between 2014 and 2018 when he was paid by a company that managed the clients’ cash transfer accounts.

Cash-sweeping accounts hold uninvested funds while clients and their advisors decide when and where to invest that money.

The clearing broker used by St. Germain made revenue share payments to St. Germain Securities based on the amount of St. Germain client cash invested in the cash transfer vehicle St. Germain used for most transactions. Accounts. This presented a conflict, the SEC said, because the clearing broker offered a cash-sweeping vehicle that did not result in revenue-sharing payments. St. Germain failed to sufficiently disclose the revenue sharing agreement or related conflicts of interest to its consulting clients.

This revenue share amount was at least equal to the lost returns for St. Germain’s consulting clients if their money had been held in a swipe account that did not pay revenue share to St. Germain.

Michael S. Matty, president of St. Germain Investment Management, said he could not comment on the matter.

But he shared a message St. Germain sent to its customers, including:

“St. Germain has entered into the settlement to resolve the SEC Administrative Proceeding. The SEC’s findings, which St. Germain neither admits nor denies, are contained in the attached Administrative Proceeding Order. The order finds that St. Germain negligently failed to adequately disclose the conflict, but does not find that St. Germain engaged in scientific or intentionally misleading conduct.

The words “based on scientists” refer to a guilty mindset.


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