Fund Manager to Pay $4.3 Million for Marketing Back-Tested Hypothetical Performance
A hedge fund manager agreed to pay $4.3 Million and its principals were barred from the industry for marketing a misleading performance track record. Although the firm was launched in 2005, the principals claimed a performance track record back to 1998 based on real trades with real money. However, the SEC alleges that the performance claims were based on back-tested hypothetical simulations. The respondents had no records of any trades occurring between 1998 and 2005. The SEC charged violations of the antifraud rules and the books and records rules.