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Virtus Investment Advisers Accused of Advertising False Performance Claims

Meyer Wilson

On November 16, 2015, the Securities and Exchange Commission (SEC) announced that Virtus Investment Advisers agreed to pay $16.5 million to settle charges of misleading mutual fund investors. The Hartford, Conn.-based investment management firm was also accused of advertising false performance claims regarding AlphaSector, a major exchange-traded fund (ETF) strategy.

According to the SEC’s investigation, Virtus Investment Advisers advertised a vastly overstated performance track record from F-Squared, a subadviser hired by the management firm for mutual funds and other clients following the AlphaSector strategy. In a separate action taken by the SEC last year, F-Squared admitted to representing their track record as real when it was allegedly backtested and hypothetical and calculations were actually inflated.

The SEC investigation found that Virtus Investment Advisers allegedly falsely stated that the AlphaSector strategy’s performance history dating back to 2001 outperformed the S&P 500 Index for numerous years. The investigation also found that the management firm allegedly made false statements in marketing materials, client representations, SEC filings, and other communications.

Virtus Investment Advisers consented to the SEC order and agreed to pay $13.4 million in disgorgement of advisory fees, a $2 million penalty, and $1.1 million in prejudgment interest.

At Meyer Wilson, our securities fraud attorneys work hard to recover losses of defrauded investors. If you were a client of Virtus Investment Advisers and lost money due to false reporting, contact our firm. We offer free consultations to discuss your case so that you can gain a better understanding of your situation and determine if you have the right to file a claim. Call today.