Former New York based broker, Mark A. Grimaldi, reportedly pays $100,000 to settle charges with the Securities and Exchange Commission (SEC) for making false claims and misleading advertisements.
According to the SEC order, Grimaldi and his firm Navigator Money Management (NMM) allegedly cherry-picked and boasted certain facts about the success of the firm’s investment advice and the past performance of securities recommendations, specifically the Sector Rotation Fund (NACFX). The selective performance highlights were published in newsletters, on Twitter, and in email correspondences to potential investors.
The SEC apparently first looked into Grimaldi and NMM back in 2008. The SEC notified NNM that the newsletter Grimaldi used to solicit clients, The Money Navigator, could be considered advertising under Rule 206(4)-1. The rule prohibits investment advisers from making false or misleading advertisements.
According to the SEC’s order, NNM and Grimaldi used newsletters to publish several misleading advertisements. “For example, they misleadingly claimed in a December 2011 newsletter that Sector Rotation Fund was “ranked number 1 out of 375 World Allocation funds tracked by Morningstar.” However, a time period of Oct. 13, 2010 to Oct. 12, 2011 was cherry-picked to broadly acclaim that ranking, and Sector Rotation Fund had a poorer relative performance during other time periods…the day before Grimaldi published the ad, at least 100 other mutual funds in that same Morningstar category outperformed Sector Rotation Fund.”
As part of the settlement agreement, Grimaldi and NMM reportedly agreed to pay $100,000 and were required to retain an independent compliance consultant for the next three years.
The foregoing information, which is available on the SEC’s website, is being provided by The White Law Group.
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