Action against Respondent, an investment adviser, in connection with alleged material misstatements and omissions to certain advisory clients and others concerning hypothetical stock returns associated with Respondent’s blended research stock ratings. According to the SEC, Respondent advertised that its blended fundamental and quantitative stock ratings could over time yield better returns than either type of ratings alone. The SEC alleged that these advertisements were misleading because the materials failed to disclose that some of the quantitative ratings used to create the hypothetical portfolio were determined using a retroactive, back-tested application of Respondent’s quantitative model. The SEC further alleges that some advertisements falsely claimed that a hypothetical portfolio was based on Respondent’s quantitative stock ratings dating back to before those ratings had been created. Finally, the SEC alleges that the misleading advertisements were caused in part by Respondent’s failure to adopt and implement written compliance policies and procedures reasonably designed to prevent inaccurate advertisements. Respondent has agreed to pay a civil penalty of $1,900,000.