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SEC Inquiry Focuses on Algorithm Trades of Adviser Unit

The Wall Street Journal isreportingthat the SEC is reviewing a series of bond trades by three insurance companies tied to Guggenheim Partners. Specifically, the SEC is seeking information on trades recommended by a trading algorithm developed by a Guggenheim unit to help the insurers select corporate bonds, according to the WSJ. So far, the SEC has found that more than half of the bond trades recommended by the algorithm were transactions between the three insurers. Guggenheim executives had previously raised concerns about the cross trades, the WSJ reported. The SEC’s inquiry is focusing on whether the Guggenheim unit that managed the algorithm should have registered as an investment adviser to the insurance company clients. The investment staff of one of the insurance companies involved in the probe had previously recommended that the company end its use of the algorithm in part due to a “lack of transparency” in how the program picked bonds, the WSJ reported.

 

 
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