UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934 

Release No. 96217 / November 3, 2022

ADMINISTRATIVE PROCEEDING

File No. 3-20881

In the Matter of

Kathryn Jane Meredith, d/b/a KM 

Advisory Services, 

Respondent.

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EXTENSION ORDER

ADMINISTRATIVE PROCEEDING

File No. 3-20882

In the Matter of

John Paul Harnish, d/b/a KM 

Advisory Services,

Respondent.

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The Division of Enforcement (“Division”) has requested an extension of time until June 

30, 2023, to submit a Proposed Plan of Distribution under Rule 1101(a) of the Commission’s 

Rules on Fair Fund and Disgorgement Plans, 17 C.F.R. § 201.1101(a).
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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 

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 

 

1

 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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 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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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. KMA, 

although eligible to do so, did not self-report to the Commission, pursuant to the Division of 

Enforcement’s Share Class Selection Disclosure Initiative. 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 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 an interest-bearing account at the U.S. Department of the Treasury, and any 

accrued interest will be added to the Fair Fund.
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In its request for an extension of time, the Division states that additional time is needed to 

complete the fund administrator solicitation and appointment process, develop the distribution 

methodology, and prepare the proposed plan of distribution.

Accordingly, for good cause shown, IT IS HEREBY ORDERED that the Division’s 

request for an extension of time until June 30, 2023 to submit a Proposed Plan of Distribution is 

granted. 

For the Commission, by the Division of Enforcement, pursuant to delegated authority.3

Vanessa A. Countryman

Secretary 

 

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 17 C.F.R. § 200.30-4(a)(21)(i).