Five months
after a jury
found F-Squared founder
Howard Present "liable on all counts" in a securities fraud case, a federal judge has weighed in on what that means for Present.
On Tuesday in Boston, United States District Judge
Leo Sorokin ordered Present to disgorge about $10.85 million, plus interest, and pay a civil penalty of $1.575 million. The judge also "enjoins Present from future violations" of the Investment Advisers Act of 1940. The case is 14-cv-14692-LTS in the U.S. District Court for the District of Massachusetts.
"Even now, Present declines to take responsibility for years of misleading clients and potential clients," judge Sorokin writes. "He fails to understand the wrongfulness of having misrepresented the strategy."
A lawyer for Present did not respond to
Reuters' requests for comment on the judge's ruling this week. Back in October, days after the jury's verdict, a spokeswoman for the law firm representing Present,
told MFWire that it was then "premature to determine" if Present would appeal the loss.
The securities fraud case against Present, brought by the SEC, centers on F-Squared's performance reporting for its
AlphaSector ETF strategies, strategies whose popularity led F-Squared to rise to be the
biggest ETF strategist in the business before its
fall. In 2014 the SEC
settled (to the tune of $35 million) with F-Squared over claims that the company misrepresented back-tested performance as real performance and also inflated that back-tested performance. Yet Present himself,
no longer chief of F-Squared,
pushed back and
demanded a jury trial, insisting that no investors were harmed and that any alleged misrepresentations were unintentional. 
Edited by:
Neil Anderson, Managing Editor
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