UNITED STATES SECURITIES AND EXCHANGE COMMISSION
INVESTMENT ADVISERS ACT OF 1940
PROCEEDINGS INSTITUTED AGAINST SCHIELD MANAGEMENT COMPANY, MARSHALL L. SCHIELD, AND TROY M. SCHIELD
The Securities and Exchange Commission (“Commission”) announced today that it instituted proceedings charging Schield Management Company (“SMC”), a Denver, Colorado investment adviser, SMC’s president, and one of SMC’s employees with falsely advertising SMC’s performance.
In the Order Instituting Proceedings, the Division of Enforcement (the “Division”) alleges that SMC for three of its investment programs advertised performance results for periods before SMC began offering such programs without disclosing the limitations of the retroactively calculated data. According to the Division, SMC combined the retroactive data with data from periods of actual trading to present cumulative returns showing that one of SMC’s programs consistently outperformed the S&P 500 index, when this program in fact underperformed the index during periods of actual trading. The Division further claims that SMC’s advertisements were false and misleading because they overstated SMC’s performance by failing to deduct applicable management fees and sales loads. As a result, SMC overstated the cumulative returns for one of its investment programs by more than twenty percent over 8 years. The Division also claims that SMC misrepresented information in its advertisements about its compliance with certain standards for presentation of performance data and failed to disclose that it assumed the reinvestment of dividends when calculating performance. The Division alleges that SMC’s conduct willfully violated the antifraud provisions of the Investment Advisers Act of 1940, Sections 206(1), (2), and (4) and Rule 206(4)-1(a)(5).
The Division alleges that Marshall Schield, SMC’s president, willfully aided and abetted SMC’s violations by failing to take the necessary steps to assure that SMC’s advertisements were correct and disclosed all material information. The Division also claims that Troy Schield, Marshall Schield’s son, willfully aided and abetted SMC’s violations by failing to deduct applicable fees and sales loads from the performance results he calculated for SMC’s advertisements.
A hearing will be held before an administrative law judge to determine whether the staff's allegations against the respondents are true, and if so, whether a cease-and-desist order is appropriate, what, if any, remedial action is appropriate and whether respondents should be ordered to pay civil penalties.