(Bloomberg) -- Macquarie Investment Management Business Trust agreed to settle allegations by the Securities and Exchange Commission that the company inflated the value of thousands of illiquid investments and overstated the performance of client accounts.
Without admitting or denying the SEC’s findings, the firm agreed to pay $79.8 million to settle the matter, the SEC said Thursday.
From January 2017 to April 2021, the firm managed a fixed-income investment strategy invested in mortgage-backed securities, collateralized mortgage obligations, and Treasury futures. Investments included thousands of smaller, so-called odd-lot positions that traded at a discount to larger positions.
The investment adviser valued the smaller positions using prices from a third party that were intended for institutional lots only. This overvalued about 4,900 collateralized mortgage obligations held in 20 advisory accounts, including 11 retail mutual funds, the SEC said. To minimize losses, the firm arranged cross trades with affiliated accounts, according to the agency.
Marketing materials, due diligence questionnaires, performance reports and forms filed to the SEC contained false and misleading statements, according to the SEC, which said the firm stopped the strategy in April 2021, when the agency started an investigation.
“This legacy matter is not consistent with how we do business,” Macquarie Asset Management said in a statement, adding that the investment adviser will remediate affected clients. “We have already undertaken and are focused on completing additional remedial steps to address the issues identified in the investigation, with clients the priority.”
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