In July 2010, a senior executive at Guggenheim, a subsidiary to Guggenheim
Partners LLC, allegedly accepted a loan from an advisory client and failed
to report it to the compliance staff. According to the SEC, the executive
took a loan of $50 million dollars to personally invest in a business
acquisition made by Guggenheim’s parent company.
Later, in August of 2010, Guggenheim allegedly engaged in two transactions
for their advisory client, one in accepting the loan, while the client
also personally invested in Guggenheim’s parent venture.
The SEC asserted that many of the other senior officials also knew about
the loan but failed to report it.
The SEC further alleged that the investment company unintentionally put
certain investments in managed assets category and charged the client
$6.5 million in asset management fees. The SEC also stated that the company’s
compliance program was not structured well enough to stop violations of
the Federal Securities Laws and that Guggenheim failed to abide by the
code of ethics.
Without confirming or denying the charges, Guggenheim has accepted to pay
the $20 million dollar penalty.