WASHINGTON (CN) - AXA Rosenberg Group and the Barr Rosenberg Research Center will pay $242 million to settle securities fraud charges, the SEC said. The SEC accused the firms, and AXA Rosenberg Investment Management, of "concealing a significant error in the computer code of the quantitative investment model that they use to manage client assets. The error caused $217 million in investor losses."
The firms will cough up the $217 million, plus a $25 million fine, the SEC said.
"The SEC's order instituting administrative proceedings against the firms found that senior management at BRRC and ARG learned in June 2009 of a material error in the model's code that disabled one of the key components for managing risk. Instead of disclosing and fixing the error immediately, a senior ARG and BRRC official directed others to keep quiet about the error and declined to fix the error at that time," the SEC said in a statement.
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