Adviser Settles Fine for Marketing Rule Violations

An investment adviser settled SEC charges for misleading advertising on fund performance.

In the Order, the SEC stated that the firm published materials that used a single investor's returns in a specific fund to mislead investors about the fund's overall performance. The SEC found that the single investor in the fund saw a positive return of + 44.8 percent, but that the firm failed to disclose that the fund's actual overall performance was a negative - 5.7 percent. 

As a result, the SEC found that the investment adviser's misleading marketing materials violated Advisers Act Section 206(4) ("Prohibited transactions by investment advisers") and Rules 206(4)-1 ("Investment Adviser Marketing") and 206(4)-8 ("Pooled investment vehicles").  

To settle the charges, the investment adviser agreed to (i) a censure, (ii) cease and desist from further rule violations and (iii) pay $100,000 to the SEC in civil penalties.