US advisory firm to pay nearly $80M to settle SEC charges

US advisory firm to pay nearly $80M to settle SEC charges

Charges include overvaluing illiquid collateralized mortgage obligations, executing cross trades that favored certain clients over others

By Ovunc Kutlu

ISTANBUL (AA) - The US Securities and Exchange Commission (SEC) announced Thursday that advisory firm Macquarie Investment Management Business Trust will pay a total of $79.8 million to settle charges related to collateralized mortgage obligations.

The charges include overvaluing approximately 4,900 largely illiquid collateralized mortgage obligations held in 20 advisory accounts, including 11 retail mutual funds, and for executing hundreds of cross trades between advisory clients that favored certain clients over others.

"It is alarming that a fiduciary took advantage of retail mutual funds it advised and executed unlawful cross trades to mitigate its overvaluation of fund assets," Eric I. Bustillo, the director of the SEC’s Miami regional office, said in a statement.

"Utilizing a third-party pricing service does not negate an investment adviser’s obligation to value assets accurately," he added.

A collateralized mortgage obligation is a mortgage-backed debt security that directs the payments of principal and interest to different types and maturities of securities.

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