Court Orders Former F-Squared CEO to Pay Over $13 Million
Litigation Release No. 24077 / March 22, 2018
Securities and Exchange Commission v. Howard B. Present, No. 14-cv-14692 (D. Mass. March 22, 2018)
A federal judge has ordered the co-founder and former CEO of investment management firm F-Squared Investments to pay over $13 million after a federal jury found him liable for making false and misleading statements to investors as the public face of F-Squared.
The SEC charged Present and F-Squared in 2014 with misleading investors about the AlphaSector strategy, the flagship product of F-Squared which Present launched in the wake of the financial crisis. F-Squared agreed to pay $35 million and admit wrongdoing to settle the agency's charges. After a three-and-a-half week trial, the jury deliberated for less than one day before finding Present liable on all of the agency's charges against him.
On March 22, 2018, the court entered a final judgment against Present, permanently enjoining him from violating Sections 206 and 207 of the Investment Advisers Act of 1940 and from aiding and abetting violations of Section 206 of the Advisers Act. The court also ordered Present to pay disgorgement of $10,849,604 plus interest of $1,377,003, and a $1,575,000 penalty. The court, in its order granting the SEC's motion for entry of a final judgment, found that, based on the evidence presented at trial, "Present's conduct was egregious," and that his "misstatements were consistent in message, broadly disseminated, and increasingly bold."
The SEC's case is being handled by Frank C. Huntington, Rachel E. Hershfang, Jennifer A. Cardello and Alfred A. Day. The investigation that led to the charges was conducted by Rory Alex, Robert Baker, Ms. Cardello, Bill Donahue, John Farinacci, Mayeti Gametchu, Kevin Kelcourse, and Jose Santillan. The examination that led to the investigation was conducted by Michael McGrath, Jamie Pickles, Risa King, Joe Downing, and Nitish Bahadur of the Boston office.