(Bloomberg) -- F-Squared Investments, a manager of investment products using ETFs that last year admitted to misleading investors about its performance, has eliminated about 25% of its staff, according to a person with knowledge of the matter.

The Wellesley, Mass.-based firm, which oversaw more than $24 billion at the end of last year, dismissed about 40 of its 161 employees, the person said, who asked not to be identified because the information is private. The firm has pared back as it adjusts to slower growth, said the person.

F-Squared in December agreed to pay $35 million to settle a lawsuit brought by the SEC, alleging that the firm falsely advertised the seven-year performance of its flagship offering. The firm made changes to its leadership last year by appointing Laura Dagan as chief executive officer to replace Howard Present, who was separately charged by the SEC for misleading investors.

“A detailed analysis of our business revealed the need for a more streamlined organizational structure that positions F- Squared for a sustainable future of growth,” the firm said in an e-mailed statement on the job cuts.

“We have created a more agile operating structure that better aligns our extraordinary people with the needs of our clients, including the elimination of redundancies in our operations.”

F-Squared is among the most prominent firms in a fast-growing investing niche, specializing in actively managed accounts that use ETFs instead of single stocks or bonds as their holdings.

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