The United States District Court for the Western District of
Wisconsin granted partial summary judgment, on the
SEC’s request, against a portfolio manager who allegedly lied
to investors as to the manager’s risk management practices.
The Court found that (i) the former mutual fund portfolio
manager falsely told investors that he used a modeling software
daily to evaluate financial risks, and (ii) the portfolio
manager’s claims were material because risk management was a
determinative factor for potential investors.
The Court held that the portfolio manager’s conduct violated
Securities Act Sections 17(a)(2) (“Recordkeeping Requirements
Relating to Stabilizing Activities”) and 17(a)(3) (“Records to Be Made by
Certain Exchange Members, Brokers and Dealers”), as well as
Advisers Act Rule 206(4)-8 (“Pooled Investment
Vehicles”).
Primary Sources
- SEC Litigation Release: SEC Obtains Partial
Summary Judgment against Portfolio Manager for Misrepresenting Risk
Management in Mutual Fund - SEC Opinion and Order: Edward S. Walczak (Case
3:20-cv-00076-wmc)
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