UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES ACT OF 1933

Release No. 10978 / September 3, 2021

INVESTMENT ADVISERS ACT OF 1940

Release No. 5847 / September 3, 2021

INVESTMENT COMPANY ACT OF 1940

Release No. 34371 / September 3, 2021

ADMINISTRATIVE PROCEEDING

File No. 3-20526

In the Matter of

Frontier Wealth Management, 

LLC and Shawn Sokolosky

Respondents.

ORDER INSTITUTING ADMINISTRATIVE 

AND CEASE-AND-DESIST PROCEEDINGS, 

PURSUANT TO 8A OF THE SECURITIES 

ACT OF 1933, SECTIONS 203(e), 203(f) AND 

203(k) OF THE INVESTMENT ADVISERS 

ACT OF 1940, AND SECTION 9(b) OF THE 

INVESTMENT COMPANY ACT OF 1940, 

MAKING FINDINGS, AND IMPOSING 

REMEDIAL SANCTIONS AND A CEASEAND-DESIST ORDER 

I.

The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative and cease-and-desist proceedings be, and hereby are, 

instituted pursuant to Section 8A of the Securities Act of 1933 (“Securities Act”), Sections 203(e), 

203(f) and 203(k) of the Investment Advisers Act of 1940 (“Advisers Act”), and Section 9(b) of 

the Investment Company Act of 1940 (“Investment Company Act”) against Frontier Wealth 

Management, LLC (“Frontier”) and Shawn Sokolosky (“Sokolosky”) (Frontier and Sokolosky 

hereinafter collectively, “Respondents”). 

II.

In anticipation of the institution of these proceedings, Respondents have submitted Offers

of Settlement (the “Offers”) which the Commission has determined to accept. Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings
herein, except as to the Commission’s jurisdiction over Respondents and the subject matter of 

these proceedings, which are admitted, and except as provided herein in Section V, Respondents

consent to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings 

Pursuant to Section 8A of the Securities Act of 1933, Sections 203(e), 203(f), and 203(k) of the 

Investment Advisers Act of 1940, and Section 9(b) of the Investment Company Act of 1940,

Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as 

set forth below. 

III.

On the basis of this Order and Respondents’ Offers, the Commission finds1that:

Summary

1. This matter concerns Frontier’s failure to adopt and implement written policies and 

procedures reasonably designed to prevent its investment advisory representatives (“IARs”) from 

recommending certain types of complex products to clients for whom they were not suitable. In 

January 2016, Frontier, a Missouri-based registered investment adviser, created the Frontier Permo 

Fund (“Feeder Fund”), a private feeder fund, which provided its clients access to invest in Fund A, 

which was managed by a third-party advisor (“Advisor A”). Fund A purported to use complex 

option strategies and synthetic futures positions to generate returns. Fund A disclosed that its 

strategy carried speculative and substantial risks with high volatility. From January 2016 to 

February 2018 (the “Relevant Period”), approximately 177 Frontier retail clients invested 

approximately $45 million into the Feeder Fund. In February 2018, due to extreme volatility in U.S. 

equity markets, Fund A lost about 35% of its value, resulting in losses of approximately $16 million 

to Frontier’s clients who invested in the Feeder Fund.

2. During the Relevant Period, Frontier delegated broad autonomy over client 

investment recommendations to its IARs. Frontier, however, did not provide them with adequate 

policies, procedures, training, and supervision concerning the features and risks of complex 

products like the Feeder Fund or whether such products were suitable for clients. Without adequate 

policies, procedures, training, and supervision in place at Frontier, certain IARs failed to 

reasonably assess whether the Feeder Fund was suitable for each client. Consequently, certain 

clients with low risk tolerances and conservative trading preferences invested in the Feeder Fund. 

3. Frontier adviser Shawn Sokolosky (“Sokolosky”) recommended that approximately 

fifty (50) of his clients invest in the Feeder Fund without adequately assessing whether the product 

was suitable for them. Sokolosky did not adequately consider each of his client’s risk tolerances,

investment objectives, or financial circumstances when recommending the Feeder Fund, which 

rendered certain recommendations unsuitable for his clients. Sokolosky also did not adequately 

understand the Feeder Fund’s trading strategy, underlying investments, and risks. He 

 

1 The findings herein are made pursuant to Respondents’ Offers of Settlement and are not 

binding on any other person or entity in this or any other proceeding. 
misrepresented the Feeder Fund’s risks and made misleading statements about the fees associated 

with the Feeder Fund. 

4. Under the circumstances described above, Frontier willfully violated Section 206(4) 

of the Advisers Act and Rule 206(4)-7 thereunder and failed reasonably to supervise its IARs

within the meaning of Section 203(e)(6) of the Advisers Act and Sokolosky willfully violated 

Sections 17(a)(2) and 17(a)(3) of the Securities Act and Section 206(2) of the Advisers Act.

Respondents

5. Frontier is a Missouri LLC based in Kansas City, Missouri. Frontier has been 

registered with the Commission as an investment adviser since July 2007. Frontier has 29 IARs in 

eight branches located in five states. It is principally owned by Frontier Wealth Enterprises, LLC.

6. Sokolosky, age 52, is a resident of Wichita, Kansas. Sokolosky is an investment 

advisory representative of Frontier and has been a Frontier employee since June 2012. From 

approximately 1997 to June 2012, Sokolosky was a partner at Dimensions Financial Group, a 

registered investment adviser based in Wichita, Kansas.

Background

Frontier’s Feeder Fund

7. Fund A’s investment strategy was to generate returns by investing in futures and 

options on S&P 500 futures. Fund A bought and/or sold options on futures to create bullish or 

bearish positions based on Advisor A’s proprietary strategy. Fund A used option spreads and 

synthetic futures to generate returns while managing risk. Fund A’s offering memorandum 

(“PPM”), which was included in the Feeder Fund offering materials, stated that the strategy was 

“speculative and entail[ed] substantial risks.” The PPM also stated that financial instruments held 

by Fund A were “highly volatile” and exposed the fund to “greater volatility than investments in 

traditional securities.” Furthermore, the PPM disclosed that these risks and that trading on margin 

subjected Fund A to potential “catastrophic margin call[s] ... [that] could lead to a substantial or 

even complete loss of the Fund’s capital.” 

8. In January 2016, Frontier established the Feeder Fund to give its retail clients who 

may not have met Fund A’s $1 million minimum investment access to Fund A. The Feeder Fund 

had a minimum investment requirement of $100,000, but Frontier permitted certain investments in 

the Feeder Fund under the stated minimum. Frontier clients paid fees when they invested in the 

Feeder Fund, which were in lieu of the client’s standard advisory fee, and which were distributed 

as follows: (1) a 0.75% management fee to Frontier, (2) a 1.25% management fee to Advisor A, 

and (3) a 20% performance fee to Advisor A. Frontier IARs, including Sokolosky, received a 

percentage of the management fees their Feeder Fund clients paid to Frontier. Approximately 177 

Frontier clients invested approximately $45 million into the Feeder Fund. 
Frontier Did Not Adopt or Implement Reasonably Designed Policies and Procedures

Relating to Suitability and Failed Reasonably to Supervise its IARs

9. During the Relevant Period, Frontier failed to adopt and implement written policies 

and procedures reasonably designed to prevent its IARs from recommending certain types of 

complex products to clients for whom they were not suitable. Frontier’s Supervisory Procedures 

and Compliance Manual contained a section titled “Suitability,” that addressed whether a 

“prospective client is suitable to become a managed account Client of Frontier.” Yet, the Manual 

neither addressed nor required that Frontier IARs (1) understand the features and risks of certain 

types of complex products available for them to recommend or (2) make recommendations that 

are suitable for clients in light of the client’s financial needs, investment objectives, risk 

tolerance and individual financial circumstances. 

10. Instead, Frontier gave its IARs broad autonomy on client investments. As such, 

some Frontier IARs made investment recommendations based on varying factors they 

purportedly discussed orally with clients. Some Frontier IARs maintained notes of client 

conversations reflecting the factors they considered in making suitability determinations and/or 

used an “Investor Profile,” a 15-question, multiple-choice survey addressing a client’s

investment objectives, net worth, annual income, employment status, and other information, 

when making investment recommendations. Yet, Frontier did not maintain such records for 

certain Feeder Fund clients. Indeed, approximately 40% of Frontier’s Feeder Fund clients did not 

have an Investor Profile at the time the Feeder Fund was recommended to them.

11. Frontier also failed to adopt or implement an adequate supervisory system for 

determining whether IARs had developed a reasonable belief that their advice was in the best 

interest of each client, including by performing a reasonable inquiry into its clients’ investment 

objectives, risk tolerances, and financial condition. Frontier IARs did not obtain formal supervisory 

review and approval of their investment recommendations. Frontier did not assign any Frontier 

supervisor the responsibility of reviewing, monitoring, or approving Frontier IARs’ 

recommendations or IAR representations to clients and potential clients concerning complex 

financial products like the Feeder Fund. Frontier did not have adequate procedures in place for 

supervisors to review or monitor whether IARs’ recommendations were suitable for their clients or 

whether IARs assessed the suitability of an investment for specific clients. 

12. Frontier neither required nor provided regular training for its IARs and supervisors 

on the suitability of the Feeder Fund. Certain IARs had limited experience or knowledge of 

options, futures, synthetic futures, or options strategies. Yet, Frontier did not provide adequate 

training on the Feeder Fund or Fund A’s complex options strategy, derivatives, or how to assess 

whether such investments were suitable for their clients.

Certain Frontier IARs Failed to Assess Whether the Feeder Fund Was Suitable for Clients

13. During the Relevant Period, approximately 177 Frontier clients invested 

approximately $45 million in the Feeder Fund. Without adequate policies, procedures, training, 
and supervision in place at Frontier, certain Frontier IARs recommended the Feeder Fund 

investment without assessing the suitability of the Feeder Fund for each client or whether the 

investment was in their best interest. Certain Frontier IARs did not consider each client’s 

investment objectives, risk tolerances, and financial condition or determine that the Feeder Fund 

was suitable and in their client’s best interest at the time they recommended the Feeder Fund to 

their clients. As a result, certain Frontier clients’ investments in the Feeder Fund were inconsistent 

with their investment objectives and risk tolerances. 

14. Due to extreme volatility in U.S. equity markets in February 2018, Fund A lost 

approximately 35% of its value, resulting in approximately $16 million in losses for Frontier 

investors.

15. Certain Frontier clients did not believe the Feeder Fund was consistent with the

investment objectives and low risk tolerances that they communicated to their Frontier IARs. 

16. Frontier received complaints from certain Feeder Fund clients alleging that they 

were not adequately informed about the Feeder Fund’s underlying investments and risks and that 

the Feeder Fund was inconsistent with their risk tolerances and/or risk profiles.

Sokolosky’s Misrepresentations and Unsuitable Recommendations

17. During the Relevant Period, Sokolosky recommended that approximately 50 of his 

clients invest in the Feeder Fund. As compensation for these recommendations, he received

approximately 50% of the total management fees paid by his clients to Frontier for their investment 

in the Feeder Fund. 

18. Sokolosky did not adequately understand Fund A’s strategy, underlying 

investments, or investment risks. He had limited knowledge and no experience trading or 

recommending a complex product that involved a combination of options, futures, options on 

futures, or synthetic futures. Likewise, he lacked experience and knowledge concerning the risks 

associated with these products and generally how these products traded. Frontier did not provide 

Sokolosky with sufficient tools or training on complex financial products like the Feeder Fund or 

on the underlying products or trading strategies used by Fund A. As such, Sokolosky lacked a 

fundamental understanding of Fund A’s trading strategy and investment risks. 

19. Because Sokolosky did not understand Fund A’s trading strategy, underlying 

investments, or risks, he did not accurately describe them to his clients and prospective clients.

Instead, in certain circumstances, he downplayed the risks associated with the Feeder Fund

investment, misstated the volatility of the investment, and misrepresented that Fund A’s historic 

performance was an indication of the Feeder Fund’s future returns and low risks. Sokolosky also 

did not accurately describe to prospective clients and his Feeder Fund clients that Frontier and 

Sokolosky received fees on the Feeder Fund investment. As a result of Sokolosky’s misstatements, 

certain of his clients had the false impression that the Feeder Fund (and Fund A) was a low-risk, 

low-volatility investment from which Frontier derived no financial benefit.
20. Sokolosky also failed to reasonably assess the suitability of the Feeder Fund for 

certain of his clients. He failed to consider each Feeder Fund client’s investment objectives, risk 

profiles, and financial circumstances in light of the risks presented by the complex financial 

product. Sokolosky recommended that several of his clients invest in the Feeder Fund either 

without the client completing an Investor Profile or based on dated information. Indeed, certain 

clients were subsequently surprised that Sokolosky recommended the Feeder Fund to them because 

they claimed that Sokolosky knew, or should have known, that their investment objective and lowrisk tolerances did not align with the Feeder Fund investment.

21. Sokolosky’s misrepresentations and unsuitable recommendations caused certain of 

his clients to invest in the Feeder Fund contrary to their conservative risk profiles and investment 

objectives. 

Violations

22. As a result of the conduct described above, Frontier willfully2violated Section 

206(4) of the Advisers Act and Rule 206(4)-7 thereunder and failed reasonably to supervise within 

the meaning of Section 203(e)(6) of the Advisers Act. 

23. As a result of the conduct described above, Sokolosky willfully3violated Sections

17(a)(2) and 17(a)(3) of the Securities Act and Section 206(2) of the Advisers Act. 

Disgorgement

The disgorgement and prejudgment interest ordered in paragraph IV.F. is consistent with 

equitable principles and does not exceed Respondent Frontier’s net profits from its violations, 

and will be distributed to harmed investors to the extent feasible. The Commission will hold 

funds paid pursuant to paragraph IV.F. in an account at the United States Treasury pending 

distribution. Upon approval of the distribution final accounting by the Commission, any amounts 

remaining that are infeasible to return to investors, and any amounts returned to the Commission 

 

2

“Willfully,” for purposes of imposing relief under Section 203(e) or (f) of the Advisers Act, 

“‘means no more than that the person charged with the duty knows what he is doing.’” Wonsover 

v. SEC, 205 F.3d 408, 414 (D.C. Cir. 2000) (quoting Hughes v. SEC, 174 F.2d 969, 977 (D.C. Cir. 

1949)). There is no requirement that the actor “also be aware that he is violating one of the Rules 

or Acts.” Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965). The decision in The Robare Group, Ltd. v. 

SEC, which construed the term “willfully” for purposes of a differently structured statutory 

provision, does not alter that standard. 922 F.3d 468, 478-79 (D.C. Cir. 2019) (setting forth the 

showing required to establish that a person has “willfully omit[ted]” material information from a 

required disclosure in violation of Section 207 of the Advisers Act).

3

Id.
in the future that are infeasible to return to investors, may be transferred to the general fund of 

the U.S. Treasury, subject to Section 21F(g)(3) of the Exchange Act. 

Frontier’s Remedial Efforts

In determining to accept Frontier’s Offer of Settlement, the Commission considered 

remedial acts promptly undertaken by Frontier and cooperation afforded the Commission staff.

Frontier’s remedial actions included enhancements to its policies and procedures as well as

enhancements to its internal controls.

IV.

In view of the foregoing, the Commission deems it appropriate, and in the public interest,

to impose the sanctions agreed to in Respondents’ Offers.

Accordingly, pursuant Section 8A of the Securities Act, Sections 203(e), 203(f) and 203(k) 

of the Advisers Act, and Section 9(b) of the Investment Company Act, it is hereby ORDERED 

that:

A. Respondent Frontier cease and desist from committing or causing any violations and 

any future violations of Section 206(4) of the Advisers Act and Rule 206(4)-7 promulgated 

thereunder. 

B. Respondent Sokolosky cease and desist from committing or causing any violations 

and any future violations of Section 17(a) of the Securities Act and Section 206(2) of the Advisers.

Act. 

C. Respondent Frontier is censured. 

D. Respondent Sokolosky be, and hereby is, suspended from association with any 

investment adviser, broker, dealer, municipal securities dealer, municipal advisor, transfer agent, or 

nationally recognized statistical rating organization for a period of 12 months, effective on the 

second Monday following the entry of this Order.

E. Respondent Sokolosky is prohibited from serving or acting as an employee, officer, 

director, member of an advisory board, investment adviser or depositor of, or principal underwriter 

for, a registered investment company or affiliated person of such investment adviser, depositor, or 

principal underwriter for a period of 12 months, effective on the second Monday following the

entry of this Order.

F. Respondent Frontier shall, within 10 days of the entry of this Order, pay 

disgorgement of $261,617, prejudgment interest of $47,095, and a civil money penalty in the 

amount of $350,000 to the Securities and Exchange Commission. If timely payment of 

disgorgement and prejudgment interest is not made, additional interest shall accrue pursuant to 
SEC Rule of Practice 600 and if timely payment of a civil money penalty is not made, additional 

interest shall accrue pursuant to 31 U.S.C. §3717.

Payment must be made in one of the following ways: 

(1) Respondent Frontier may transmit payment electronically to the 

Commission, which will provide detailed ACH transfer/Fedwire 

instructions upon request;

(2) Respondent Frontier may make direct payment from a bank account via 

Pay.gov through the SEC website at 

http://www.sec.gov/about/offices/ofm.htm; or 

(3) Respondent Frontier may pay by certified check, bank cashier’s check, or 

United States postal money order, made payable to the Securities and 

Exchange Commission and hand-delivered or mailed to: 

Enterprise Services Center

Accounts Receivable Branch

HQ Bldg., Room 181, AMZ-341

6500 South MacArthur Boulevard

Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying 

Respondent’s name as a Respondent in these proceedings, and the file number of these 

proceedings; a copy of the cover letter and check or money order must be sent to Ana Petrovic, 

Division of Enforcement, Securities and Exchange Commission, 175 West Jackson Boulevard, 

Suite 1450, Chicago, Illinois 60604. 

H. Respondent Sokolosky shall pay a civil penalty of $100,000 to the Securities and 

Exchange Commission. Payment shall be made in the following installments: $25,000 within 10 

days of entry of this Order and the remaining amount to be paid within 12 months of entry of the 

Order with $25,000 installments due every 90 days after the entry of this Order. Payments shall be 

applied first to post order interest, which accrues pursuant to 31 U.S.C. 3717. Prior to making the 

final payment set forth herein, Respondent Sokolosky shall contact the staff of the Commission for 

the amount due. If Respondent Sokolosky fails to make any payment by the date agreed and/or in 

the amount agreed according to the schedule set forth above, all outstanding payments under this 

Order, including post-order interest, minus any payments made, shall become due and payable 

immediately at the discretion of the staff of the Commission without further application to the 

Commission. If timely payment of a civil money penalty is not made, additional interest shall 

accrue pursuant to 31 U.S.C. §3717.
Payment must be made in one of the following ways: 

(1) Respondent Sokolosky may transmit payment electronically to the 

Commission, which will provide detailed ACH transfer/Fedwire 

instructions upon request;

(2) Respondent Sokolosky may make direct payment from a bank account via 

Pay.gov through the SEC website at 

http://www.sec.gov/about/offices/ofm.htm; or 

(3) Respondent Sokolosky may pay by certified check, bank cashier’s check, or 

United States postal money order, made payable to the Securities and 

Exchange Commission and hand-delivered or mailed to: 

Enterprise Services Center

Accounts Receivable Branch

HQ Bldg., Room 181, AMZ-341

6500 South MacArthur Boulevard

Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying 

Respondent’s name as a Respondent in these proceedings, and the file number of these 

proceedings; a copy of the cover letter and check or money order must be sent to Ana Petrovic, 

Division of Enforcement, Securities and Exchange Commission, 175 West Jackson Boulevard, 

Suite 1450, Chicago, Illinois 60604. 

I. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, a Fair Fund is created 

for the disgorgement, prejudgment interest, post order interest and penalties referenced in 

paragraphs IV.F. and IV.H. above. Amounts ordered to be paid as civil money penalties pursuant 

to this Order shall be treated as penalties paid to the government for all purposes, including all tax 

purposes. To preserve the deterrent effect of the civil penalty, Respondents agree that in any 

Related Investor Action, they shall not argue that they are entitled to, nor shall they benefit by, 

offset or reduction of any award of compensatory damages by the amount of any part of 

Respondents’ payment of a civil penalty in this action (“Penalty Offset”). If the court in any 

Related Investor Action grants such a Penalty Offset, Respondents agree that they shall, within 30 

days after entry of a final order granting the Penalty Offset, notify the Commission’s counsel in 

this action and pay the amount of the Penalty Offset to the Securities and Exchange Commission. 

Such a payment shall not be deemed an additional civil penalty and shall not be deemed to change 

the amount of the civil penalty imposed in this proceeding. For purposes of this paragraph, a 

“Related Investor Action” means a private damages action brought against the Respondents by or 

on behalf of one or more investors based on substantially the same facts as alleged in the Order 

instituted by the Commission in this proceeding.
V.

It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section 

523 of the Bankruptcy Code, 11 U.S.C. §523, the findings in this Order are true and admitted by 

Respondent Sokolosky, and further, any debt for disgorgement, prejudgment interest, civil penalty 

or other amounts due by Respondent Sokolosky under this Order or any other judgment, order, 

consent order, decree or settlement agreement entered in connection with this proceeding, is a debt 

for the violation by Respondent of the federal securities laws or any regulation or order issued 

under such laws, as set forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. §523(a)(19).

By the Commission.

Vanessa A. Countryman

Secretary