F-Squared CEO exits amid SEC investigation by Stephen Gandel @FortuneMagazine November 14, 2014, 10:58 AM EST E-mail Tweet Facebook Google Plus Linkedin Share icons F-squared Investments, a fast growing money management company that has been under investigation by the Securities Exchange Commission, announced that its CEO and founder Howard Present is leaving the firm. Laura Dagan, who is on the company’s board, will take over the role of CEO of the Boston-based company, which has attracted $28 billion in assets to its strategies since 2008, making it one of the industry’s fastest growing firms, and the largest in a growing niche within the exchange traded fund business. Prior to joining F-Squared, Dagan was the CEO of Dwight Asset Management, which, according to F-Squared’s press release, rose from $2 billion under management to $68 billion under her watch. Present was not pushed out and is leaving F-Squared voluntarily, according to a source familiar with the situation. Present is stepping down from the company’s board as well, though he will retain a minority ownership stake in the company. “On behalf of the Board and all of F-Squared, I would like to thank Howard for his vision, dedication and commitment to F-Squared,” Dagan said. “We wish him well in all his future endeavors.” But F-Squared’s growth has not come without controversy. The firm has been under investigation by the SEC for at least a year over the track record it used to market its investment products, including the popular mutual fund Virtus Premium AlphaSector, which is co-managed by F-Squared and sold by mutual fund company, Virtus Investment Partners. That track record claimed F-Squared’s main strategy had far outperformed the S&P 500 throughout most of the 2000s, and included a number of years that pre-dated the firm’s existence. About a year ago, after being contacted by the SEC, F-Squared removed a large portion of its historical track record from its marketing materials. Three months ago, F-Squared announced that it had received a so-called Wells Notice from the SEC, which suggests the regulator is seriously considering filing civil charges against the firm. The company also disclosed that Present had received an individual Wells Notice as well. F-Squared specializes in building portfolios, which it manages for mutual fund companies and financial advisors through separately managed accounts, from exchange traded funds. It the largest of this growing portion of the ETF business, which Morningstar says has attracted $100 billion in assets in the past few years. F-Squared, like a number of other funds, calls itself a “tactical” asset manager because it can move in and out of sectors of the market, as well as out of the market entirely. Present and others have said that makes tactical funds safer than traditional mutual funds, because they can turn assets into cash when the markets are headed down. Tactical funds have gained in popularity since 2008. Editor’s note: An earlier version of this story said the portion of F-Squared’s track record under question was in the 1990s. In fact, the performance period that F-Squared removed from its marketing materials went from early 2001 to late 2008.