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Adviser Settles with SEC for Fair Valuation and Disclosure Failures

Calvert Investment Management, Inc. recently settled charges with the SEC regarding the valuation of securities in funds it advised.  The SEC charged that it improperly fair valued certain fund holdings; failed to make disclosures to investors and prospective investors that its initial efforts to remedy the valuation error did not conform to the Calvert Funds’ NAV error correction procedures; and the remediation process compensated shareholders differently, depending on whether they invested directly or through an intermediary. Additionally, according to the SEC’s order, Calvert caused a mutual fund it advised to engage in a securities transaction with another of its sub-advised funds, without meeting the requirements for an exemption from the prohibitions against affiliated transactions. Without admitting or denying the SEC’s findings, Calvert agreed, among other things, to pay a civil penalty of $3.9 million and to undertake a self-administered distribution to affected shareholders.

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