A National Securities Arbitration & Investment Fraud Law Firm

Transamerica’s $97M Refund

The SEC has ordered four entities of Transamerica to refund $97 million to investors after discovering that faulty investment models used for fund management didn’t work as it was purported.

The SEC Has Proposed New Regulations for Fiduciaries on silverlaw.comAegon USA Investment Management, operating through Transamerica Asset Management, Transamerica Capital, Inc. and Transamerica Financial Advisors, discovered the model’s inconsistencies, but didn’t notify anyone when they stopped using it. This kept investors from understanding the risks and kept them from making more informed decisions about their investments.

The quantitative investment models were developed by an inexperienced junior analyst who had no experience in portfolio management. Once the company discovered the errors, the models were quietly taken out of circulation. Investors put billions of dollars into mutual funds and other accounts that used these models, which were sold as “model driven” and “model supported.” However, there was no hard evidence that these models actually worked, and no disclosure of risk was ever offered.

Additionally, the companies relied on flawed investment histories and testimonies from the now defunct investment advisor F-Squared. Before its own bankruptcy in 2015, F-Squared caused serious problems for thirteen other brokerage firms as well. The company also hosted a website for Transamerica which contained a hypothetical performance record that wasn’t completely back-tested.

The Transamerica companies settled the claims without confirming or denying the charges, agreeing to pay $53.3 million in disgorgement, $8 million in interest and a $36.3 million penalty. The company will also create a fund to administer the refunds to the investors who were affected by the defective models. Two officers will pay $90,000 in additional penalties in the case.

The SEC issued a press release, available on their website in relation to the activity.

Are You A Transamerica Investor?

Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct.  Most cases handled on a contingent fee basis. This means that you won’t any pay legal fees unless we are successful. Call us toll free at 800-975-4345, or use our online contact form to get in touch.

Contact Information