The former chief executive for F-Squared Investments Inc has been found guilty of violating U.S. securities laws.
A federal jury in Boston determined that Howard Present “intended to defraud investors or was reckless in how he touted the history of his company’s flagship investment product,” according to Reuters.
According to the SEC, beginning in September 2008, Present began marketing AlphaSector as having a successful record dating back to 2001 that was based on a multibillion-dollar wealth manager’s strategy.
“But really, it was all made up,” SEC lawyer Rachel Hershfang told jurors on Friday.
In truth, the data F-Squared used to market AlphaSector was based on an algorithm developed by a college student at a nearby firm and was applied to historical market data, resulting in a hypothetical performance, the SEC said.
The SEC also said an F-Squared analyst who calculated the hypothetical numbers made a mistake in the process that substantially inflated the investment performance that appeared in marketing materials Present wrote.
In 2014, F-Squared agreed to pay $35 million and admit wrongdoing to resolve claims it misled investors.
Read more here: reuters.com
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