In February 2016, the SEC settled claims that investment adviser Cantella & Co. improperly relied on and disseminated materially misleading marketing materials prepared by F-Squared Investments, Inc. (F-Squared) for its so-called “AlphaSector” strategies. See “Hedge Fund Managers May Be Liable for Performance Claims of Others” (Mar. 3, 2016). The fallout from F-Squared’s improper use of backtesting in those marketing materials continues to spread to others who used its services. The SEC recently settled 13 additional enforcement proceedings against advisers who allegedly disseminated some or all of F-Squared’s erroneous claims without attempting to confirm their veracity. This article summarizes the allegations contained in the settlement orders, along with the terms of each settlement. For more on performance advertising, see “Liquidity and Performance Representations Present Potential Pitfalls for Hedge Fund Managers” (Mar. 31, 2016); and our two-part series entitled “How Can Hedge Fund Managers Market Their Funds Using Case Studies Without Violating the Cherry Picking Rule?”: Part One (Dec. 5, 2013); and Part Two (Dec. 12, 2013). For other performance advertising issues, see our articles on GIPS compliance claims; testimonials and social media; the use of gross performance results; and the use of other firms’ track records.
Sep. 22, 2016
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TOPICS
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ENTITIES
- Assetmark, Inc
- Banyan Partners, LLC
- BB&T Securities, LLC
- Congress Wealth Management LLC
- Constellation Wealth Advisors LLC
- Executive Monetary Management, LLC
- F-Squared Investments, Inc
- Genworth Financial Wealth Management, Inc
- HT Partners LLC
- J.J.B. Hilliard, W.L. Lyons, LLC
- Ladenburg Thalmann Asset Management Inc
- Prospera Financial Services, Inc
- Risk Paradigm Group, LLC
- Schneider Downs Wealth Management Advisors, LP
- SEC - Securities and Exchange Commission
- SEC Division of Enforcement
- Shamrock Asset Management LLC
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PEOPLE
SEC Settlements Highlight Need for Managers to Verify Performance Claims of Others Prior to Use
- Vincent PitaroPrivate Equity Law Report
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TOPICS
-
ENTITIES
- Assetmark, Inc
- Banyan Partners, LLC
- BB&T Securities, LLC
- Congress Wealth Management LLC
- Constellation Wealth Advisors LLC
- Executive Monetary Management, LLC
- F-Squared Investments, Inc
- Genworth Financial Wealth Management, Inc
- HT Partners LLC
- J.J.B. Hilliard, W.L. Lyons, LLC
- Ladenburg Thalmann Asset Management Inc
- Prospera Financial Services, Inc
- Risk Paradigm Group, LLC
- Schneider Downs Wealth Management Advisors, LP
- SEC - Securities and Exchange Commission
- SEC Division of Enforcement
- Shamrock Asset Management LLC
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PEOPLE
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