In July 2010, a senior executive at Guggenheim, a subsidiary to Guggenheim Partners LLC, allegedly accepted a loan from an advisory client and failed to report it to the compliance staff. According to the SEC, the executive took a loan of $50 million dollars to personally invest in a business acquisition made by Guggenheim’s parent company.
Later, in August of 2010, Guggenheim allegedly engaged in two transactions for their advisory client, one in accepting the loan, while the client also personally invested in Guggenheim’s parent venture.
The SEC asserted that many of the other senior officials also knew about the loan but failed to report it.
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The SEC further alleged that the investment company unintentionally put certain investments in managed assets category and charged the client $6.5 million in asset management fees. The SEC also stated that the company’s compliance program was not structured well enough to stop violations of the Federal Securities Laws and that Guggenheim failed to abide by the code of ethics.
Without confirming or denying the charges, Guggenheim has accepted to pay the $20 million dollar penalty.
Recovering Losses Caused by Investment Misconduct.