SEC Whacks Quant

WASHINGTON (CN) - The SEC on Thursday filed a settled complaint against Barr Rosenberg, a cofounder of the money management firm AXA Rosenberg, who concealed a computer coding error in a quantitative investment model he developed, until the error cost AXA clients $217 million.

Rosenberg agreed to settle the fraud complaint with the SEC by paying $2.5 million and being barred for life from the securities industry.

AXA Rosenberg and its affiliates previously settled with the SEC and agreed to pay the $217 million they cost clients, plus a $25 million penalty.

In announcing Rosenberg's settlement, the SEC said he "learned of the error in June 2009 but directed others to keep quiet about it and not fix it immediately. Rosenberg denied the existence of any significant errors in the model during an October 2009 board meeting discussion about its performance. AXA Rosenberg disclosed the error to SEC examination staff in late March 2010 after being informed of an impending SEC examination. The error was not disclosed to clients until April 2010, causing them $217 million in losses."

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit