Class Certified in Action Over Misleading Investment Guidance
A Manhattan federal judge has certified a class to bring suit against an investment management firm accused of misleading the investing public with trumped-up performance data for its trading strategy.
May 15, 2017 at 04:04 PM
2 minute read
A Manhattan federal judge has certified a class to sue an investment management firm accused of misleading the investing public with trumped-up performance data for its trading strategy.
The defendant, Virtus Investment Partners, agreed in 2015 to pay a $16.5 million settlement to the U.S. Securities and Exchange Commission to settle allegations that investors were misled about the performance of AlphaSector, a product offered by F-Squared Investments that uses an algorithm to signal when to buy or sell a nine-industry, exchange-traded fund.
AlphaSector, launched in 2008, became F-Squared's flagship product and Virtus hired F-Squared as a subadviser for two of its mutual funds. From 2009 to 2013, Virtus' stock price surged from $10 per share to $247, according to court papers, and within that time frame the company's revenue grew threefold to $389 million.
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