On June 5, the U.S. Securities and Exchange Commission (SEC) announced final judgment on its fraud charges against investment adviser Navellier & Associates, Inc. and its founder and chief investment officer, Louis Navellier. Following the ruling of a federal district court in Massachusetts, the SEC receives more than $30 million in monetary relief.
The SEC alleges that Navellier & Associates defrauded clients and potential clients by providing false and misleading information in their marketing materials. Specifically, the materials included false information regarding the performance track record of the “Vireo AlphaSector” investment strategies that the firm offered under the “Vireo” brand name. The court found that Navellier & Associates were aware of the misleading statements but failed to inform their clients. The court held that Navellier & Associates and Mr. Navellier violated the antifraud provisions of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The court ordered the defendants jointly and severally to pay disgorgement of $28,964,571, including $6,513,619 in prejudgment interest. Additionally, the court leveled $2,000,000 in civil penalties against Navellier & Associates and $500,000 against Mr. Navellier.
On July 31, the SEC updated their list of Notices of Covered Actions. One newly posted Notice refers to the Navellier case. The Notice of Covered Action signals to individuals to submit whistleblower reward claims. Whistleblowers who provided the SEC with original information that aided in the enforcement action are entitled to a monetary reward for between 10-30% of the $30 million collected.
SEC whistleblowers are vital in policing corporate fraud and protecting investors. Since the SEC Whistleblower Program was established in 2010, SEC enforcement actions from whistleblower tips have resulted in more than $2 billion in financial remedies. The SEC has granted whistleblower awards totaling over $500 million. In addition to monetary awards, the SEC Whistleblower Program provides strong anti-retaliation protections to whistleblowers.
Read the SEC press release: Navellier & Associates, Inc., and Louis Navellier (Release No. LR-24826; Jun. 4, 2020)