SEC Charges AlphaCentric Advisors LLC with Compliance Violations Relating to Valuation of Mutual Fund Assets  

According to an administrative announcement on Jun. 3, 2022, the Securities and Exchange Commission has reportedly settled charges against Puerto Rico-based registered investment adviser AlphaCentric Advisors LLC for compliance violations in its role as adviser to the AlphaCentric Income Opportunities Fund.  

AlphaCentric allegedly failed to implement its policies and procedures related to the valuation of securities held by the Fund and failed to adopt and implement policies reasonably designed to oversee the Fund’s portfolio manager, according to the order.   

From May 2015 through July 2015, AlphaCentric purportedly failed to implement policies requiring it to assist with the process for determining the fair value of Fund holdings. According to the order, the portfolio manager allegedly had purchased small “odd-lot” bonds and the Fund valued those holdings at higher prices provided by a pricing service for larger “round-lot” bonds.   

The SEC found that from January 2017 to February 2019, AlphaCentric allegedly failed to adopt and implement policies to oversee the Fund’s portfolio manager when the portfolio manager improperly placed bids on bonds the Fund already held in order to increase the prices the Fund relied on to value its holdings.  

AlphaCentric has reportedly agreed, without admitting or denying the SEC’s findings, to a cease-and-desist order, a censure, and a civil penalty in the amount of $300,000.   

Potential Lawsuits to Recover Financial Losses   

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