Major regulator issues sanctions to advice firms that relayed false product claims
Citing an SEC press release, an article from Financial Advisor IQ reports that the regulator has gone after 13 investment advice firms for spreading false claims made by F-Squared Investments about its main product.
The now-defunct company had made representations that its AlphaSector strategy for investing in ETFs outperformed the S&P 500 Index. These claims were proven false in 2014, when F-squared admitted that the strategy had only been back-tested, and its performance had been inflated by approximately 350%.
The SEC has found and fined 13 companies, all of which it says passed on the claims to their clients without substantiating the information themselves. The sanctions range from US$100,000 to half a million US dollars, depending on the amount of fees collected by firms for peddling the product.
“When an investment advisor echoes another firm’s performance claims in its own advertisements it must verify the information first rather than merely accept it as fact,” said SEC Enforcement Division Director Andrew Ceresney.
The firms fined are AssetMark; BB&T Securities; Banyan Partners; Congress Wealth Management; Constellation Wealth Advisors; Executive Monetary Management; HT Partners; Hilliard Lyons; Ladenburg Thalmann Asset Management; Prospera Financial Services; Risk Paradigm Group; Schneider Downs Wealth Management Advisors; and Shamrock Asset Management.
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The now-defunct company had made representations that its AlphaSector strategy for investing in ETFs outperformed the S&P 500 Index. These claims were proven false in 2014, when F-squared admitted that the strategy had only been back-tested, and its performance had been inflated by approximately 350%.
The SEC has found and fined 13 companies, all of which it says passed on the claims to their clients without substantiating the information themselves. The sanctions range from US$100,000 to half a million US dollars, depending on the amount of fees collected by firms for peddling the product.
“When an investment advisor echoes another firm’s performance claims in its own advertisements it must verify the information first rather than merely accept it as fact,” said SEC Enforcement Division Director Andrew Ceresney.
The firms fined are AssetMark; BB&T Securities; Banyan Partners; Congress Wealth Management; Constellation Wealth Advisors; Executive Monetary Management; HT Partners; Hilliard Lyons; Ladenburg Thalmann Asset Management; Prospera Financial Services; Risk Paradigm Group; Schneider Downs Wealth Management Advisors; and Shamrock Asset Management.
Related Stories:
Exchange-traded funds come under US regulator scrutiny
Golfer Phil Mickelson forfeits nearly $1 million after investigation
