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In the Matter of Northern Lights Compliance Services, LLC

Investment Company Act Release No. 30502 (2013)

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In the Matter of Northern Lights Compliance Services, LLC

Securities and Exchange Commission
Investment Company Act Release No. 30502 (2013)

CS

Facts

Northern Lights Fund Trust and Northern Lights Variable Trust (the trusts) were investment companies registered with the Securities and Exchange Commission (SEC) that operated a series of mutual funds. Administrative and compliance services for the trusts and their funds were provided by Gemini Fund Services, LLC (GFS) and Northern Lights Compliance Services, LLC (NLCS). On multiple occasions, in shareholder reports prepared by GFS for certain of the funds, there were material misstatements or omissions in boilerplate disclosures regarding the evaluations of the funds’ advisory contracts by the trusts’ boards of trustees. These disclosures were based in part on board minutes that GFS drafted and that were reviewed and approved by the trustees. On several other occasions, GFS neglected to include in the funds’ shareholder reports any information about the trustees’ evaluations of the funds’ advisory contracts. GFS also failed to ensure that all documents considered by the trustees in approving or renewing the funds’ advisory contracts were maintained and preserved by the funds. The SEC brought an administrative proceeding against GFS, NLCS, and the trustees for violations of the Investment Company Act of 1940 (Company Act).

Rule of Law

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Holding and Reasoning ()

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