SEC Fines U.S. Asset Manager $97.6 million for Misleading Investors

The SEC charged four entities of a U.S. asset manager for misconduct involving faulty quantitative investment models and ordered the entities to pay $97.6 million in fines. According to the order, the SEC found the models utilized to make investment decisions were developed solely by an inexperienced junior analyst and contained numerous errors. When the company learned about the errors, they stopped using the models, however, failed to tell investors or disclose the errors. 

“Investors were repeatedly misled about the quantitative models being used to manage their investments, which subjected them to significant hidden risks and deprived them of the ability to make informed investment decisions,” said C. Dabney O’Riordan, Co-Chief of the SEC Enforcement Division’s Asset Management Unit.

In separate orders, the SEC charged the companies' former Global Chief Investment Officer and former Director of New Initiatives for not taking reasonable steps to ensure the models work properly, among other compliance failures related to the development and use of models.

Read SEC's press release here.

Please feel free to contact our experts with any further questions.

 
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