Aug 25 (Reuters) - The U.S. Securities and Exchange Commission fined 13 investment advisory firms on Thursday for spreading false claims made by the now-defunct F-Squared Investments Inc, which had been one of the largest marketers of investment products using exchange-traded funds.
The firms "accepted and negligently relied upon" the flawed claims when advising clients to buy F-Squared products, the agency said.
AssetMark Inc of Concord, California, agreed to pay $500,000, the largest penalty among the 13 firms, the SEC said. The lowest fine was $100,000.
The firms also included a unit of North Carolina-based BB&T Corp and Hilliard Lyons of Louisville, Kentucky. Both agreed to $200,000 penalties.
The penalties are based on the fees each firm earned from F-Squared's flagship "AlphaSector" strategy, a customized model for allocating investors' assets in exchange-traded funds, stocks and bonds, the SEC said.
None of the firms admitted or denied the allegations.
In 2014, F-Squared admitted to wrongdoing and agreed to pay $35 million to settle SEC charges that it defrauded investors through false-performance advertising.
F-Squared filed for bankruptcy last year.
The SEC said its enforcement review of investment advisers found that the 13 firms repeated many of F-Squared's claims to customers, including that the AlphaSector strategy had outperformed the S&P 500 index from 2001 to 2008.
The advisers, however, did not obtain sufficient documentation to substantiate the information that F-Squared advertised, the SEC said.
AssetMark immediately removed the erroneous F-Squared information upon becoming aware of the inaccuracies and later removed F-Squared from its platform, a spokesman said.
Hilliard Lyons stopped offering F-Squared products in 2013, a spokesman said. The SEC case did not say Hilliard Lyons clients lost money by investing in F-Squared products, he added.
A BB&T representative could not be immediately reached for comment. (Reporting by Suzanne Barlyn; Editing by Meredith Mazzilli and Lisa Von Ahn)
