US authorities have charged a former portfolio manager at Oppenheimer & Company with misleading investors about the valuation and performance of a fund consisting of other private equity funds.

The Securities and Exchange Commission alleges that Brian Williamson issued quarterly reports and marketing materials that inflated the results of the Oppenheimer Global Resource Private Equity Fund in 2009.

Williamson has denied wrongdoing and said he will contest charges.

"Investors deserve and the law requires honest disclosure about how their investments are valued. Williamson improperly lured investors to the private equity fund he managed by providing false and misleading information about the fund’s performance,” said Andrew Ceresney, co-director of the SEC’s division of enforcement. 

Earlier this year, Oppenheimer agreed to pay $2.8 million in a settlement of related charges.

The company also had to pay an additional penalty of $132,421 in a related action taken by the Massachusetts Attorney General.

According to the SEC, Williamson reported an internal rate of return that did not take into account any fees and expenses that the fund paid to underlying fund managers or the additional fees and expenses that the fund paid Oppenheimer. 

The SEC said Williamson sent marketing materials that failed to deduct fees and expenses and as a result, the fund’s reported performance, as measured by its internal rate of return, was significantly enhanced.

In addition, Williamson modified the fund’s largest investment from $6 million to approximately $9 million, a significant markup to the underlying manager’s estimated value. This had a substantial effect on the performance of the fund, increasing its return from approximately 3.8 per cent to 38.3 per cent for the quarter ended June 30, 2009.