“Money market funds seek to maintain a stable share price by investing in highly safe securities. Under the federal securities laws, a money market fund may only invest in securities determined by the fund’s board of trustees to present minimal credit risk,” the US authority said.

The SEC alleges that the firm and Oglesby “repeatedly” made false statements to trustees of the Ambassador Money Market Fund about the credit risk in the securities they purchased for its portfolio. It also said the trustees were misled about the fund’s exposure to the eurozone credit crisis of 2011 and the portfolio diversification.

“Compliance with the risk-limiting provisions is critically important for a money market fund.  Deviations can have serious consequences for pricing of fund shares and how the fund markets itself to investors,” said Marshall Sprung, co-chief of the SEC Enforcement Division’s Asset Management Unit.

The SEC’s order alleges that Ambassador Capital Management violated the antifraud provisions of the Investment Advisers Act of 1940 while Oglesby “aided and abetted” the violations. 

The authority's litigation will be led by Jonathan Polish, Robert Moye, and Timothy Leiman.