The Securities and Exchange Commission has fined Kelmoore Investment $100,000 for misleading investors that it was only charging them 1% of assets under management when, in fact, fees for the five funds it managed between 1999 and 2005 were actually as high as 3.63%. Internally, Kelmoore distinguished between advisory and brokerage services, when, in fact, both those services were for managing the funds. Thus, the SEC said, factoring in the brokerage services, the fees were actually much higher. “Kelmoore owed its mutual fund investors a duty to provide a fair and accurate representation of the fees they were being charged,” said Helane Morrison, district administrator of the SEC’s San Francisco office. “Instead, the firm’s misleading disclosures served to bury the real costs of Kelmoore’s mutual funds.” Kelmoore agreed to the settlement and to reform its compliance policies without admitting or denying the charges.

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