According to the press release filed on February 27, 2015, the Complaint alleges that since at least May 28, 2013, Virtus knew that its sales and marketing of the AlphaSector's past track record was based on false and misleading statements about its success against the S&P 500 index. Virtus's sales of its AlphaSector funds drove its increases in revenues and income, and caused substantial artificial appreciation in its stock price. On September 5, 2014, the Wall Street Journal first reported that the Securities and Exchange ("SEC") Commission was investigating F-Squared, a co-adviser responsible for Virtus's AlphaSector Funds, over alleged falsifications of its past track record. Following this disclosure, Virtus's stock fell by $37 per share, and lost more than 16 percent of its value within a few days.
On December 22, 2014, the SEC announced that it had formally charged F-Squared and its President for fraud and various violations of the Investment Advisors Act of 1940, and that it had reached a settlement with F-Squared regarding those charges. The SEC's announcement, although never mentioning Virtus by name, revealed further details and evidence of F-Squared's fraud which implicated Virtus.
On this news, shares in Virtus, which traded as high as $240.72 per share during the Class Period, closed at $169.70 per share on December 22, 2014.
On July 1, 2016, the Court issued an Order granting in part and denying in part Defendants' Motion to Dismiss.