Action against Respondent, the former director of new initiatives at an investment adviser, for alleged failure to address certain risks identified in an internal audit report.  The SEC alleges that Respondent’s failure to address these risks caused the adviser not to take reasonable steps to ensure that the quantitative models worked as intended, to adopt and implement reasonable controls regarding the testing, approval, and documentation of any changes to its models, and to ensure the products’ portfolio managers’ discretion to depart from the model-directed trades was defined, monitored, and documented.  Respondent has agreed to pay a civil penalty of $25,000.

SEC Order