UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934 

Release No. 98024 / July 31, 2023

ADMINISTRATIVE PROCEEDING

File No. 3-20881

In the Matter of

Kathryn Jane Meredith, d/b/a 

KM Advisory Services, 

Respondent.

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ORDER APPOINTING

FUND ADMINISTRATOR,

SETTING BOND AMOUNT, AND 

AUTHORIZING PAYMENT OF 

FEES AND EXPENSES 

ADMINISTRATIVE PROCEEDING

File No. 3-20882

In the Matter of

John Paul Harnish, d/b/a 

KM Advisory Services,

Respondent.

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On June 6, 2022, the Commission issued separate, but related administrative and ceaseand-desist orders (collectively, the “Orders”) against Kathryn Jane Meredith, d/b/a KM Advisory 

Services (“Meredith”)1and John Paul Harnish, d/b/a KM Advisory Services (“Harnish”)2

(collectively, the “Respondents”). In the Orders, the Commission found that former registered 

1

 Corrected Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Section 15(b) of the 

Securities Exchange Act of 1934 and Sections 203(e), 203(f) and 203(k) of the Investment Advisers Act of 1940, 

Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order, Exchange Act Rel. No. 95046 

(June 6, 2022), (Admin. Proc. File No. 3-20881).

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 Corrected Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Section 15(b) of the 

Securities Exchange Act of 1934 and Sections 203(e), 203(f) and 203(k) of the Investment Advisers Act of 1940, 

Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order, Exchange Act Rel. No. 95047 

(June 6, 2022), (Admin. Proc. File No. 3-20882).
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investment adviser KM Advisory Services (“KMA”), an unincorporated sole-proprietorship 

owned by Meredith from 1994 through February 2020 and purchased by Harnish in February 

2020—breached its fiduciary duties in connection with the receipt of mutual fund fees pursuant 

to Rule 12b-1 under the Investment Company Act of 1940 (“12b-1 fees”) and commissions in 

the form of sales “loads” from advisory client investments without fully and fairly disclosing the

related conflicts of interest. 

Since at least January 2016, and continuing through December 2020, KMA invested the 

vast majority of its clients’ assets in certain mutual funds that paid 12b-1 fees and charged sales 

load commissions exclusively through an introducing broker-dealer (the “Introducing BrokerDealer”), with whom Meredith and later Harnish was a registered representative. As a result, 

KMA’s clients paid 12b-1 fees and commissions to the Introducing Broker-Dealer, a portion of 

which were shared with KMA (Meredith and Harnish). KMA failed to fully and adequately 

disclose this arrangement and the conflicts of interest arising therefrom. KMA also breached its 

duty of care by not routinely comparing the Introducing Broker-Dealer’s order execution with 

other broker-dealers, which KMA’s advisory relationship with its clients required. KMA 

therefore caused its advisory clients to invest through the Introducing Broker-Dealer and in share 

classes of mutual funds that charged 12b-1 fees when other broker-dealers made available share 

classes of the same funds to their customers that may have presented a more favorable value for 

KMA’s clients under the particular circumstances in place at the time of the transactions. 

Furthermore, KMA failed to adopt and implement written compliance policies and procedures 

reasonably designed to prevent violations of the Advisers Act and the rules thereunder in 

connection with its mutual fund share class and broker-dealer selection practices. As a result of 
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the conduct described above, KMA willfully violated Sections 206(2) and 206(4) of the Advisers 

Act and Rule 206(4)-7 thereunder.

Among other remedies, the Commission ordered Meredith to pay $574,743.53 in 

disgorgement, $77,252.39 in prejudgment interest, and a $100,000.00 civil money penalty and 

Harnish to pay $220,097.30 in disgorgement, $5,549.69 in prejudgment interest, and a $75,000 

civil money penalty, to the Commission. In each of the Orders, the Commission also created a 

Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002 and further ordered the 

Fair Funds to be combined to form the KM Advisory Fair Fund (the “Fair Fund”), so the 

penalties paid, along with the disgorgement and interest paid, can be distributed to harmed 

investors.

The Fair Fund consists of the $1,052,641.99 paid by the Respondents. The Fair Fund has 

been deposited in a Commission-designated account at the U.S. Department of the Treasury, and 

any accrued interest will be added to the Fair Fund.

The Division of Enforcement (the “Division”) now seeks the appointment of KCC Class 

Action Services, LLC (“KCC”) as the fund administrator of the Fair Fund and requests that the 

administrator’s bond be set at $1,052,641.99. KCC is included in the Commission’s approved 

pool of administrators. 

The Division further requests that the Commission authorize the Office of Financial 

Management (“OFM”), at the direction of an Assistant Director of the Office of Distributions, to 

pay the Fund Administrator’s fees and expenses from the Fair Fund, so long as the total amount 

paid to the Fund Administrator, including the invoice to be paid, does not exceed the total 

amount of the approved cost proposal submitted by the Fund Administrator.
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Accordingly, IT IS HEREBY ORDERED that:

A. KCC is appointed as the fund administrator, pursuant to Rule 1105(a) of the 

Commission’s Rules on Fair Fund and Disgorgement Plans (“Commission’s 

Rules”);

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B. KCC shall obtain a bond in accordance with Rule 1105(c) of the Commission’s 

Rules,4in the amount of $1,052,641.99; 

C. the Fund Administrator will submit invoices to the Commission staff for services 

rendered, in accordance with Rule 1105(d) of the Commission’s Rules,5and 

D. at the direction of an Assistant Director of the Office of Distributions, OFM is 

authorized to pay the Fund Administrator’s fees and expenses from the Fair 

Fund, in accordance with Rule 1105(e) of the Commission’s Rules,6so long as 

the total amount paid to the Fund Administrator, including the invoice to be paid, 

does not exceed the total amount of the approved cost proposal submitted by the 

Fund Administrator.

For the Commission, by the Division of Enforcement, pursuant to delegated authority.7

Vanessa A. Countryman

Secretary 

3

 17 C.F.R. § 201.1105(a).

4

 17 C.F.R. § 201.1105(c).

5

 17 C.F.R. § 201.1105(d).

6

 17 C.F.R. § 201.1105(e).

7

 17 C.F.R. § 200.30-4(a)(17) and 17 C.F.R. § 200.30-4(a)(21)(vi).