The Securities and Exchange Commission has settled a complaint against a firm it accused of inflating the net asset values of one of its funds by as much as 600%, according to an SEC release.

Since the allegations arose, Rupay-Barrington Capital Management has reportedly liquidated its $4 million Total Return fund. The firm no longer offers mutual funds, according to published reports.

A July 2000 complaint filed by the SEC against Rupay-Barrington says the firm had promised to pay fund expenses that exceeded a certain percentage of the fund’s net assets. But it never did, the complaint says, and the money owed grew steadily over time to as much as $250,000. That, in turn, falsely inflated the NAV of the fund to nearly 600% in one case, according to the complaint.

In addition, the SEC alleges that the firm never told its shareholders about what the SEC calls a "worthless receivable," instead encouraging shareholders to continue investing in the fund.

"The situation became so desperate that the fund improperly suspended redemptions for its Total Return portfolio, which held the largest portion of the receivable and hence was illiquid," the complaint says.

The defendants in the case "consented, without admitting or denying the allegations of the complaint," to a preliminary injunction that enjoins the firm from violating sections of the Securities act of 1933 and other securities law, the SEC said.

The firm also agreed to allow AIM Advisors, the special master in the case, to take over the fund and liquidate its assets, the SEC said.

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