New York-listed wealth manager Oppenheimer & Co has agreed to pay the US authorities $2.8 million after a Securities and Exchange Commission investigation found that the firm had been misleading investors about a private equity fund.

The SEC said that Oppenheimer Asset Management and Oppenheimer Alternative Investment Management had distributed misleading quarterly reports and marketing materials to investors about its Oppenheimer Global Resource Private Equity Fund.

The materials suggested that fund’s holdings of other private equity funds were valued “based on the underlying managers’ estimated values”.  However, the portfolio manager of the Oppenheimer fund actually valued the fund’s largest investment at a significant mark-up to the underlying manager’s estimated value - a change that made the fund’s performance appear significantly better as measured by its internal rate of return, the SEC said in a statement.

According to the SEC, Oppenheimer advisors marketed the OGR Private Equity Fund to investors from around October 2009 to June 2010. The fund invests in other private equity funds, and it was marketed primarily to pensions, foundations, and endowments, as well as to high net worth individuals and families.

“This action against Oppenheimer for misleadingly writing up the value of illiquid investments is clear warning that the SEC will not tolerate lax disclosure practices in the marketing of private equity funds,” said George S Canellos, acting director of the SEC’s division of enforcement.

Oppenheimer will pay an additional penalty of $132,421 to the Commonwealth of Massachusetts in the related action taken by the Massachusetts Attorney General, the SEC said in a statement.