New York (HedgeCo.Net) – The SEC has warned that 13 hedge funds and their advisers have been only reporting favorable information about themselves, leaving out their losing bets in past performance when advertising under the new JOBs Act.

“We plotted the accounts that were allocated winning trades more often than losing trades.” Andrew Bowden, head of the SEC’s Office of Compliance, Inspections and Examinations, said at a CFA Institute conference in Boston, ” we came out of that and found 13 hedge funds that had accounts that were being disproportionately allocated favourable trades.”

“You can’t cherry-pick your past specific recommendations because there is an opportunity for you, to pick the biggest winners you ever had,” Bowden said, according to Bloomberg. “We’ve seen people passing off past specific recommendations that they never made.”

“One of the most common findings we have are that the valuation and policies and procedures aren’t highly evolved and aren’t very specific,” Bowden said. “We’ll see people from quarter to quarter or year to year changing their valuation methodology and managing to pick the one that leads to the highest valuation in their fund.”

The SEC today also announced a record award of more than $30 million to a whistleblower who provided key original information that led to a successful SEC enforcement action.

Alex Akesson
Editor at HedgeCo.net
alex@hedgeco.net
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