Firm to Pay $503K to SEC for Misleading on Mutual Funds

Semper caused the overvaluation of smaller-sized bond positions known as "odd lots" bought by SEMMX, from the fund's launch in July 2013 until May 2014, the SEC claimed. That "overvaluation of odd lot positions was responsible for a substantial portion of SEMMX's performance during this period and resulted in the overstating of SEMMX's net asset value," according to the SEC.

The SEC's order also found that in SEMMX's 2013 and 2014 annual reports to investors, Semper didn't disclose that SEMMX's investment performance had been materially improved by the overvaluation of odd lot bond positions. "Instead, Semper misleadingly attributed the performance to, among other things, Semper's purchase of non-agency mortgage backed securities that rose towards fundamental values during the periods in question," the SEC said.

Semper also "failed to adopt policies and procedures that were reasonably designed to address Semper's public disclosures concerning the attribution of SEMMX's reported performance," the SEC order said.

The SEC's order alleged that Semper willfully violated Section 206(4) of the Investment Advisers Act of 1940 and Section 34(b) of the Investment Company Act of 1940, and that Semper caused SEMMX's uncharged violation of Rule 22c-1.

Semper, which has about $3 billion in assets under management, has been registered with the SEC as an investment advisor since 1992, according to the SEC.