Van Kampen Investment Advisory Corp. of Oakbrook, Ill. and former company chief investment officer Alan Sachtleben have agreed to pay $125,000 in fines for what the SEC said was misleading advertising about the performance of the Van Kampen Growth Fund. The SEC announced the settlement Sept. 8.
The SEC alleged that the Growth Fund in 1996 - before it was opened to the public - derived more than half of its performance from investing in hot initial public offerings at a time when the fund had assets of $200,000 to $380,000. After the Growth Fund opened to the public in 1997 and assets increased to $109 million, Van Kampen advertised an investment return of 61.99 percent without disclosing the effect the IPO investments had on the fund's performance.
Richard Walker, director of the SEC's division of enforcement, said it was the first time the SEC had sued a fund firm for advertising related to an incubator fund. Van Kampen, which agreed to pay a $100,000 fine, and Sachtleben neither admitted nor denied the SEC's allegations in settling the case.