Virtus Investment Partners and Funds Negatively Effected by F-Squared Investments SEC Probe

According to the Wall Street Journal that Shares of mutual fund provider Virtus Investment Partners Inc. (Virtus Investment) tanked on news that the Securities and Exchange Commission (SEC) is closer to recommending charges against F-Squared Investments Inc., (F-Squared) a sub-adviser on the Virtus funds. F-Squared –builds mutual fund portfolios consisting of exchange traded funds (ETFs) for the Virtus mutual funds.

F-Squared received a Wells notice from the SEC which indicates an investigation and possible action by the commission against the company. According to WSJ, the SEC’s investigation revolves around whether F-Squared advertising of their quantitative stock strategies was truthful and whether they were tied to real money. The timeframe looks at the returns from April 2001 through September 2008.

While VRTS and the five Virtus Funds Premium AlphaSector (VAPAX), Allocator Premium AlphaSector (VAAAX), AlphaSector Rotation (PWBAX), Global Premium AlphaSector (VGPAX), Dynamic AlphaSector (EMNAX) are not subject to the SEC’s investigation the potential negative outcome for F-Squared is already negatively impact the mutual funds and therefore VRTS as well as clients flee these products.

As shown below the Virtus AlphaSector fund has dropped significantly since the investigation.

Virtus AlphaSector













What investors who are recommended these funds do not realize is that their investment firm has an obligation to perform due diligence and only invest their customers in investments that are suitable for that customer’s risk tolerance, age, investment objectives, and any other information disclosed by the investor.

Investors who have suffered losses in investments such as the Virtus Funds may be able recover their losses through arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors and determining when brokerage firms fail to supervise their representatives sale of unsuitable investments or their failure to perform proper due diligence. Our consultations are free of charge and the firm is only compensated if you recover.

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