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Horter Investment settles with SEC over F-Squared strategy ads

Horter Investment Management LLC will pay disgorgement of $482,595, prejudgment interest of $46,209 and a civil money penalty in the amount of $250,000 to the SEC to settle allegations that it advertised an F-Squared Investments Inc. strategy that had materially inflated performance track record.

Between January 2012 and November 2014, Horter offered the AlphaSector strategy to its clients. From January 2012 to Oct. 1, 2013, the investment adviser ran advertisements, relying on misrepresentations made by F-Squared, and falsely stated that assets had been invested in the AlphaSector strategy from April 2001 to September 2008 and the strategy's track record had significantly outperformed the S&P 500 Index during this time.

The regulator noted that Horter did not take enough steps to verify the accuracy of F-Squared's historical data and other related information. It also did not gather sufficient documentation that substantiated F-Squared's advertising claims.

Horter Investment did not admit nor deny the findings but it consented to the entry of the cease-and-desist proceedings that the SEC instituted against it.