A bank agreed to pay a $90 million penalty to
settle an SEC charge that it misrepresented the process
through which it determined net new assets ("NNA").
NNA is a "metric valued by investors in financial
institutions to measure success in attracting new business."
The bank had disclosed that it was providing client specific asset
assessments, but the bank "instead took an undisclosed
results-driven approach to determining NNA in order to meet certain
targets established by senior management." In addition, a
former executive of the firm agreed to settle charges that he "pressured employees to
classify certain high net worth and ultra-high net worth client
assets as NNA despite concerns raised by employees most
knowledgeable about a particular client's intent." The
former executive agreed to pay an $80,000 penalty.
SEC Enforcement Director Andrew J. Ceresney summarized the
mechanics of the misrepresentation:
[The firm] conveyed to the investing community that it followed
a structured process for recognizing net new assets when, in fact,
the process was reverse-engineered to meet targets. [The] failure
to disclose this results-driven approach deprived investors of the
opportunity to fairly judge the firm's success in attracting
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