In re Virtus Investment Partners, Inc. Securities Litigation

Updated: August 04, 2015
Status: Ongoing Case

Serving as co-lead counsel in a securities class action against mutual fund company, Virtus Investment Partners, following an SEC investigation of its subadvisor, F-Squared

On June 9, 2015, Labaton Sucharow was appointed co-lead counsel in this securities action against mutual fund company, Virtus Investment Partners (Virtus).

The action alleges that Virtus made false and misleading statements in the sale of the company's so-called "AlphaSector" funds. The AlphaSector funds purportedly utilized quantitative models to forecast optimal trading decisions, and accounted for approximately 20 percent of Virtus' total assets under management, materially contributing to Virtus' revenue growth. The AlphaSector funds were offered though a co-advisory agreement with F-Squared Investments, Inc.

In marketing materials distributed during the class period, Virtus reported historical returns for the AlphaSector funds that had outperformed the S&P 500 index's performance since 2001. Virtus presented these outstanding historical returns to its retail clients, even though it allegedly knew they were overstated.

On September 3, 2014, the Wall Street Journal reported that F-Squared was under investigation for falsifying performance measures of the AlphaSector strategy in marketing materials. In reaction to these developments, Virtus' stock price fell more than 16 percent. On December 22, 2014, F-Squared settled with the SEC and paid a penalty of $35 million. Virtus stock, which had traded at a high of $240.72 per share during the class period, fell to $169.70 per share.

The case is In re Virtus Investment Partners, Inc. Securities Litigation, No. 15-1249. Lead plaintiff is Arkansas Teacher Retirement System. The defendant is Virtus Investment Partners Inc.