U.S. Court of Appeals Upholds SEC’s Backtesting Finding -
In a 2016 case before the U.S. Court of Appeals for the D.C. Circuit, a former investment adviser lost a petition to review and vacate the decision of an SEC administrative law judge relating to the improper use of backtested information. The case was mainly followed by market participants who are following the challenges to the SEC’s use of administrative law judges to handle disciplinary cases and other alleged violations of the federal securities laws. However, the case is also an illustration of how the improper presentation of backtested information can lead to trouble under the SEC’s rules and regulations.
The Court of Appeals’ decision may be found at: Raymond J. Lucia Cos. v. SEC, 832 F.3d 277 (DC Cir 1986).
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