SEC closes NPB fund after 96.13% of harmed investors fully compensated

The SEC has closed NPB Financial Group’s investor compensation fund after reporting that 96.13% of harmed investors were fully compensated, including reasonable interest. Its November 6 order authorises $452,748.65 in remaining money to go to the US Treasury.[1]

The order records 879 payments totalling $628,439.04; $609,065.08 was successfully disbursed. No minimum payment threshold was applied, with individual payments ranging from one cent to $31,874.77. The 96.13% figure measures investors fully compensated, not the proportion of the fund returned.[1]

The residual balance includes the civil penalty less reasonable interest, post-order interest, uncashed cheques, returned funds and rounding amounts. The SEC says further distribution of that balance is infeasible. It approved the final accounting and terminated the fund.[1]

The case began with an August 20, 2020 settlement over mutual-fund share-class selection. NPB, then described by the SEC as a registered adviser and broker-dealer, settled without admitting or denying the findings. The SEC found that it received 12b-1 distribution fees without disclosing the resulting conflicts, including when cheaper classes of the same funds were available.[2]

The original order required $532,519.96 in disgorgement, $92,668.15 in prejudgment interest and a $425,000 penalty, totalling $1,050,188.11. The fund combined compensation-related amounts and a punitive charge. NPB had to pay distribution expenses separately, keeping those costs outside the fund.[2]

That structure explains why comparing client payments with the full settlement amount would give a misleading loss-recovery rate. The distribution formula covered affected clients’ 12b-1 fees plus interest; it did not promise each investor a proportionate share of every penalty dollar.[2]

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