A Massachusetts-based investment management firm has agreed to pay $35 million and admit wrongdoing to settle charges of false advertising to defraud investors. The Securities and Exchange Commission announced Monday it would also separately charge F-Squared Investment's CEO and President Howard Present with making false and misleading statements to investors. The SEC said F-Squared, which is the largest marketer of index products using exchange-traded funds, began receiving signals based on an algorithm from a third-party data provider that could determine when to buy and sell an investment and could create a model portfolio that rebalanced when signals changed. The SEC said when selling the product, known as AlphaSector, F-Squared falsely advertised a seven-year track record when the product's algorithm wasn't even in existence.
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