For every regulatory action, there are ripples.

In the case of Virtus Investment Partners, these ripples come in form of a nearly 20 percent drop in share price, after the after news broke Wednesday that SEC had given F-Squared, which sub-advises five Virtus mutual funds totaling $13 billion in assets under management, a Wells notice, according to Chris Dieterich at the Wall Street Journal.

Dieterich reports that SEC investigators are focusing on how F-Squared disclosed in advertising the performance of U.S. quant equity strategies from April 2001 through September 2008. Yet the performance reporting concerns do not directly involve any of the mutual funds F-Squared sub-advises. A Wells notice is not formally an allegation of any wrongdoing, rather a notice that the agency is conducting a probe.

The five funds sub-advised by F-Squared account for roughly one-fifth of Virtus' $61 billion in AUM, and most of the $1 billion of inflows Virtus saw in the first half of 2014, according to Dieterich. 

Edited by: Tommy Fernandez


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