Axa’s Barr Rosenberg to Pay $2.5 Million SEC Fine, Is Banned From Industry
Axa Rosenberg Group LLC’s co- founder Barr M. Rosenberg agreed to pay $2.5 million to settle claims by the U.S. Securities and Exchange Commission, which accused him of securities fraud for concealing a coding error in his firm’s investment model.
Rosenberg, 68, who learned of the error in June 2009, directed others to conceal it and didn’t inform clients until April 2010, according to a statement on the agency’s website. Rosenberg agreed to a lifetime securities industry ban, the SEC said.
Axa Rosenberg, a unit of Paris-based insurer Axa SA, last year said it overhauled its management team after learning of the error, which cost clients $217 million in losses. Rosenberg stepped down as part of the overhaul, while Axa Rosenberg in February repaid clients the $217 million in losses and agreed to pay the SEC a $25 million fine.
“Investors in quant funds trust their advisers to develop, maintain and operate the quant models that drive a fund’s performance,” Bruce Karpati, co-chief of the SEC enforcement’s asset-management unit, said in today’s statement. “Rosenberg betrayed investors when he failed to disclose the material coding error.”
Jonathan Bass, an attorney for Rosenberg, said his client “is distressed by the events that occurred at Axa Rosenberg.”
“He never acted with any intention to cause harm to Axa Rosenberg clients or to gain any advantage or benefit for himself,” Bass, a partner with Coblentz, Patch, Duffy & Bass LLP in San Francisco, said in a telephone interview. “He is relieved that the matter is now concluded.”
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