The Securities and Exchange Commission (SEC) announced today a settlement with Claymore Advisors, LLC, a portfolio management services firm acquired by Guggenheim Partners in October 2009 and operating today as Guggenheim Funds Investment Advisors (GFIA). Because the conduct in question occurred prior to Guggenheim Partners’ acquisition of Claymore Advisors, Guggenheim Partners was in no way party to the matters described in the SEC Order.
The issues reviewed by the SEC, related to Claymore Advisors, were focused on supervision and disclosure, and not around the legality of the strategy or the trades executed. The SEC determined that Claymore Advisors, in its role as investment advisor and fund administrator to the Fiduciary/Claymore Dynamic Equity Fund (HCE, the Fund), failed reasonably to supervise a third party portfolio manager, Fiduciary Asset Management, LLC (FAMCO), that employed strategies exposing the Fund to risks which were inadequately disclosed by HCE, and that Claymore Advisors caused the Fund to have inadequate disclosures.
Today, the SEC also announced a settlement agreement with FAMCO, the third-party portfolio manager in question. The SEC found that FAMCO misled investors and failed to disclose significant material information about trading strategies and the risks associated with them. Per its settlement agreement with the SEC, FAMCO is required to: (1) pay a civil money penalty; and (2) disgorge fees it received in connection with its role as portfolio manager of HCE. Two FAMCO employees implicated in the matter have not settled and the SEC is pursuing legal action against them.
The legacy Claymore Advisors business has established a distribution plan to reimburse former HCE shareholders for 100 percent of losses ($45,396,878) attributable to the five specific trades cited by the SEC and associated with the conduct described in the Order. These trades were executed from September 2008 to October 2008, over a year before Guggenheim Partners acquired Claymore Advisors. The Fund was closed in May 2009, also prior to the Claymore Advisors acquisition, and Guggenheim Partners was in no way party to the misconduct alleged. Guggenheim Partners has engaged in preliminary dialogue with FAMCO regarding shared funding of the distribution plan.
For additional information about the Settlement and the Plan of Distribution, including how to obtain copies of the Notice and Claim Form, please call the Plan Administrator toll-free at 1-855-590-8694. You may also write to the Plan Administrator at: HCE Distribution Plan, c/o GCG, Inc., PO Box 9950 Dublin, Ohio 43017-5950.
About Guggenheim Partners, LLC
Guggenheim Partners, LLC is a privately held global financial services firm with more than $160 billion in assets under management.* The firm provides asset management, investment banking and capital markets services, insurance, institutional finance and investment advisory solutions to institutions, governments and agencies, corporations, investment advisors, family offices and individuals. Guggenheim Partners is headquartered in New York and Chicago and serves clients around the world from more than 25 offices in eight countries. For more information about Guggenheim Partners, visit guggenheimpartners.com.
* Assets under management are as of September 30, 2012 and include consulting services for clients whose assets are valued at approximately $35 billion.
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