F-Squared Investments Faces Regulatory Scrutiny Over Marketing Disclosures

By on December 12, 2013

The Securities and Exchange Commission (“SEC”) is investigating whether F-Squared Investments Inc., a manager of exchange-traded fund portfolios, deceived investors with its marketing materials.  Specifically, the agency is looking into historical performance disclosures, the Wall Street Journal reported.

The probe, which has been in affect for several months, focuses on returns for two indexes where F-Squared posted theoretical performances instead of actual investor returns, the Journal added.

Additionally, F-Squared may have contradicted certain facts in recent marketing materials compared to previous editions.   For instance, F-Squared’s AlphaSector Premium Index used to disclose performance metrics going back to April 2001.  However, recent materials claim the money manager did not deal with advisory client assets until 2009.

F-Squared also eradicated mentions of performance metrics prior to 2008 in statements sent to the SEC.

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