Oppenheimer & Co. will pay $2.8 million to settle allegations brought by the Securities and Exchange Commission. The SEC alleged that two investment advisers at Oppenheimer & Co. misled investors about the valuation policies and performance of a private equity fund they manage. An SEC investigation found that Oppenheimer Asset Management and Oppenheimer Alternative Investment Management disseminated misleading quarterly reports and marketing materials stating that the fund’s holdings of other private equity funds were valued “based on the underlying managers’ estimated values.”
The portfolio manager of the Oppenheimer fund actually valued the fund’s largest investment at a significant markup to the underlying manager’s estimated value, a change that made the fund’s performance appear significantly better as measured by its internal rate of return. The fund was marketed primarily to pensions, foundations, and endowments as well as high net worth individuals and families.
While this type fraud is complicated, and it’s not the sort that gets a great deal of media attention, it’s still fraud. Investors must be protected by the federal government and the companies that cheat and commit fraud should be held accountable.
Source: Corporate Crime Reporter
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