Heartland fined $3.9M for mispricing funds

When projects went into default or were failing, Heartland didn't accurately re-price the funds, the SEC said.
JAN 29, 2008
By  Bloomberg
The Securities and Exchange Commission has ordered Heartland Advisors Inc. to pay $3.9 million in penalties for marking down the prices of two municipal bond funds more than seven years ago. The company and its chief executive, William J. Nasgovitz, were fined $3.5 million. Heartland chief operating officer Paul T. Beste and former employees Thomas Conlin and Greg D. Winston were fined $95,000 each. Senior vice president of trading Kevin D. Clark and former employee Kenneth J. Della were ordered to pay $25,000 each. The SEC alleged that the Milwaukee-based investment firm failed to properly price the value of some bonds in the Short Duration High-Yield Municipal Fund and the High-Yield Municipal Bond Fund in 2000. The funds had invested primarily in non-rated medium- and lower-quality municipal bonds. When projects underlying some bonds held by the funds went into default and other projects were failing, Heartland didn't accurately re-price the funds to reflect the lower valuations, the SEC said. The net asset value of the high-yield fund plummeted 69.4% in one day, and the short-duration fund fell 44%. As a result, investors lost about $60 million when Heartland Advisors was forced to devalue bonds in the funds in October 2000. The employees agreed to the SEC order without admitting or denying its findings.

Latest News

Advisor moves: LPL adds $425M Evermark Investment Partners, $300M Merril Lynch group hops to Ameriprise
Advisor moves: LPL adds $425M Evermark Investment Partners, $300M Merril Lynch group hops to Ameriprise

LPL's latest addition, a San Diego team defecting from RBC, represents a milestone for the broker-dealer giant's Strategic Wealth model for wirehouse breakaways.

Senate tax bill stalls as hardliners balk at changes
Senate tax bill stalls as hardliners balk at changes

The new legislative proposal, which includes more aggressive cuts to Medicaid and a lower SALT cap, threatens a goal of passing President Trump's tax-cut legislation by July 4.

Osaic snaps up $13.5B CW Advisors
Osaic snaps up $13.5B CW Advisors

The deal for the Audax-backed RIA based in Boston gives Osaic a strategic foothold to attract more advisors and clients across the wealth spectrum.

Senate wants changes to Trump’s tax bill; here’s what’s expected
Senate wants changes to Trump’s tax bill; here’s what’s expected

‘Revenge tax’ on foreign investors could be scrapped in new version.

CFTC’s regulatory pioneer Bagley dies aged 96
CFTC’s regulatory pioneer Bagley dies aged 96

Veteran legislator helped set the standard for derivatives regulation.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave