A fund manager recently agreed to settle with the SEC and pay $10.5 million for various internal failures that led to investor losses the SEC cites were directly tied to misleading performance presentations. The settlement describes that investors were assured by the firm they would be protected against losses of more than 8% in a hedged futures fund, when no such valid process was in place. Founder and President Amy Lynch explains that ineffective monitoring and absent communication between a portfolio manager and his supervisor exacerbated an inadequate process to mitigate losses. Ms. Lynch further points to the fund administrator’s role, where it failed to flag instances when the fund did not adhere to the portfolio guidelines outlined in its prospectus. See IGNITES (subscription required), “There Is No Excuse:’ Behind the $10.5M Case Against Catalyst”
