Navellier & Associates: Chapter 11 After $22.7M SEC Fraud Judgment

The New York Times once called Louis Navellier "an icon among growth stock investors." For more than three decades, Navellier published quantitative analysis on growth stocks, managed billions in assets, and published investment newsletters that claimed to outperform the S&P 500 by wide margins. His firm, Navellier & Associates Inc., marketed a data-driven stock selection methodology to retail investors.

On September 5, 2025, Navellier & Associates filed for chapter 11 bankruptcy in the District of Nevada—three months after the U.S. Supreme Court refused to hear the firm's appeal of a $22.7 million SEC disgorgement judgment. The judgment stems from fraud charges related to the "Vireo AlphaSector" investment strategies, which the SEC alleged were marketed with a fabricated track record. With appellate options exhausted, the Reno-based investment adviser turned to bankruptcy court. The SEC has responded by filing an adversary proceeding to determine that its judgment is non-dischargeable under Section 523(a)(19) of the Bankruptcy Code—the provision that excepts securities fraud debts from discharge.

Company Background

Louis Navellier founded Navellier & Associates in Reno, Nevada. He began publishing quantitative analysis on growth stocks in 1980, then started managing private accounts for high-net-worth individuals seven years later. The firm grew to manage over $2.5 billion in private accounts and no-load mutual funds, supported by a team of approximately 11 professional analysts.

The company's investment approach centered on a multi-step screening process incorporating fundamental and quantitative analysis. Navellier & Associates offered a broad spectrum of investment styles including growth, value, international, and global strategies, serving retail investors through its advisory business. As of September 2025, the firm maintained SEC registration (CRD #107568) with approximately $968 million in discretionary assets under management across roughly 1,303 client accounts.

Newsletter business and media profile. Beyond wealth management, Navellier built a media presence through investment newsletters published by InvestorPlace Media. His Growth Investor advisory service, established in 1998, claimed to have outperformed the S&P 500 by a margin of two-to-one. The Hulbert Financial Digest rated his Emerging Growth newsletter as the number one performer in the 20-year category from 1985 to 2005, estimating that following the newsletter's advice from 1985 through 2008 would have resulted in gains of approximately 2,156%—compared to 869% for the S&P 500 during the same period.

Navellier expanded into five investment newsletters: Growth Investor, Breakthrough Stocks, Accelerated Profits, Power Options, and Platinum Growth Club. He made regular appearances on Bloomberg, Fox News, and CNBC providing market outlook and analysis, and authored "The Little Book That Makes You Rich" as part of Macmillan's "Little Book, Big Profits" series. The publisher described him as "one of the most well-respected and successful growth investors of our day."

The Vireo AlphaSector Fraud

The fraud at the center of the SEC enforcement action involved investment strategies marketed under the "Vireo AlphaSector" brand. According to SEC allegations, Navellier & Associates distributed advertisements claiming that client assets had been invested in these strategies from April 2001 through September 2008. The advertisements explicitly stated that the historical performance was "not back-tested."

Both claims were false. No client assets had actually tracked the Vireo AlphaSector strategy during the advertised period. The performance figures were substantially overstated even when characterized as back-tested returns. The SEC alleged that Navellier knew the track record could not be validated and concluded it was fabricated, yet rather than correcting the misrepresentations to clients and prospective clients, the firm allegedly ignored and concealed these indicators.

The F-Squared Connection.

The Vireo AlphaSector track record was connected to a broader scandal involving F-Squared Investments, once the largest U.S. money manager creating portfolios from exchange-traded funds. At its height, F-Squared had more than $28 billion invested in its strategies. The AlphaSector performance data that multiple advisers—including Navellier—relied upon and marketed to clients was based on false data.

In December 2014, F-Squared agreed to pay $35 million to settle SEC charges over falsified AlphaSector performance. The SEC revealed that F-Squared had advertised a successful track record based on what it claimed was the actual performance of real investments for real clients between 2001 and 2008. In reality, the algorithm was created by a college student at another firm—not by the wealth manager as advertised—and the hypothetical data contained a calculation mistake that inflated the outcomes by approximately 350%.

The scandal's reach extended beyond F-Squared itself. In 2016, the SEC fined 13 additional advisory firms a combined $2.2 million for spreading false claims that F-Squared had initially made. F-Squared filed for chapter 11 bankruptcy in July 2015 following its settlement, with its AlphaSector investment strategies ultimately sold to Broadmeadow Capital.

Sale of the Vireo Business.

Navellier & Associates sold the Vireo line of business in August 2013—before the F-Squared scandal became public—for $14 million. At the time of sale, the Vireo AlphaSector strategies encompassed approximately 6,000 accounts valued at approximately $1.4 billion in assets under management.

SEC Enforcement Action

2017 Fraud Charges.

In September 2017, the SEC announced fraud charges against Navellier & Associates Inc. and Louis Navellier personally. The complaint alleged violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940—the antifraud provisions governing registered investment advisers.

Section 206 mandates fiduciary standards for investment advisers and prohibits fraudulent activities. The SEC's fiduciary duty framework requires RIAs to act in the best interests of clients, avoid activities that conflict with client interests, and provide full disclosure of all material facts to clients and prospective clients. SEC staff have emphasized that "an investment adviser cannot disclose or negotiate away, and investor cannot waive, the federal fiduciary duty."

The complaint charged that defendants:

• Defrauded clients about the performance track record of Vireo AlphaSector investment strategies
• Distributed materially false advertisements and client communications
• Breached fiduciary duty to clients and prospective clients
• Ignored and concealed indicators about the fabricated track record
• Knew that the Vireo AlphaSector track record could not be validated

2020 District Court Judgment.

On June 2, 2020, the U.S. District Court for the District of Massachusetts ruled in favor of the SEC on fraud claims against both defendants. The court held that Navellier & Associates and Louis Navellier violated the antifraud provisions of the Investment Advisers Act and ordered substantial monetary relief:

The court dismissed two of the SEC's four claims while ruling in the agency's favor on the remaining two. Navellier announced its intention to appeal the ruling, contesting the disgorgement methodology from the outset.

Appeals and Supreme Court Denial

Liu v. SEC and the Remand.

The timing of Navellier's appeal coincided with a development in securities enforcement law. In June 2020, the Supreme Court decided Liu v. SEC, holding that disgorgement in SEC enforcement actions must be "awarded for victims" as an equitable remedy. The decision imposed constraints on the SEC's ability to obtain disgorgement, requiring that amounts not exceed the wrongdoer's net profits and that awards be directed toward victims.

The Navellier case was remanded to the district court in light of Liu. The defendants argued that because their alleged victims—the Vireo AlphaSector clients—did not suffer pecuniary harm from the misrepresented track record, disgorgement was inappropriate under the new standard. The district court disagreed and entered an amended disgorgement award of $22,734,487 plus prejudgment interest.

First Circuit Affirmance.

In July 2024, the U.S. Court of Appeals for the First Circuit issued a unanimous decision upholding the amended disgorgement order. The appellate court held that disgorgement is tied to unjust enrichment—depriving wrongdoers of ill-gotten gains—and that it is not necessary for clients to have suffered financial harm for disgorgement to be appropriate.

The First Circuit rejected defendants' argument that because Vireo AlphaSector clients did not suffer pecuniary harm, the SEC could not obtain disgorgement. The court characterized disgorgement as an equitable remedy distinct from compensatory damages, focused on preventing the defendant's unjust enrichment rather than making victims whole. The decision emphasized that Navellier & Associates collected fees and sold the Vireo business for $14 million based on a track record it knew to be fraudulent—profits that represented unjust enrichment regardless of whether clients lost money.

Circuit Split Created.

The First Circuit's ruling in Navellier created a direct conflict with the Second Circuit's 2023 holding in SEC v. Govil. In Govil, the Second Circuit held that the SEC must demonstrate investor financial harm to obtain disgorgement. This circuit split raised a question of federal law: after Liu v. SEC, does disgorgement require a showing that investors suffered actual financial losses?

Navellier petitioned the Supreme Court for certiorari, arguing that the First Circuit's ruling "conflicts directly" with Liu v. SEC and the Second Circuit's interpretation of the disgorgement standard. The firm contended that the SEC exceeded its statutory authority since the supposed victims suffered no pecuniary harm from the misrepresented track record.

The SEC opposed the petition, arguing that the Supreme Court should decline to resolve the circuit split. The agency defended the First Circuit's approach, maintaining that disgorgement properly focuses on unjust enrichment rather than victim harm.

Supreme Court Certiorari Denial.

On June 6, 2025, the U.S. Supreme Court denied Navellier's petition for certiorari. The denial left the First Circuit's ruling intact and the circuit split unresolved. For Navellier & Associates, the $22.7 million disgorgement judgment became final, and the firm's appellate options were exhausted.

Three months later, on September 5, 2025, Navellier & Associates filed its chapter 11 petition.

Chapter 11 Filing and Early Case Developments

Petition and First Day Relief.

Navellier & Associates filed its chapter 11 petition in the U.S. Bankruptcy Court for the District of Nevada on September 5, 2025. The case was assigned to Hon. Hilary L. Barnes. Louis Navellier is identified as the principal and responsible party for the debtor.

The firm's first day motion focused on maintaining prepetition bank accounts to continue operations. On December 2, 2025, the court entered a Final Bank Accounts Order authorizing the debtor to maintain its existing bank accounts and continue operating its investment advisory business through the chapter 11 process.

Continued Operations.

Navellier & Associates continues to function as an SEC-registered investment adviser. The firm filed an updated Form ADV with the SEC on September 18, 2025—less than two weeks after the bankruptcy filing—reporting approximately $968 million in discretionary assets under management across 1,303 client accounts.

The debtor has filed monthly operating reports demonstrating ongoing business activity:

These reports indicate that the company is maintaining operations and generating revenue during the chapter 11 case, managing client portfolios while the restructuring proceeds.

Case Administration.

The Section 341 meeting of creditors was initially scheduled for October 6, 2025. The debtor filed its schedules and statements—including the Non-Individual Summary of Assets and Liabilities—on October 20, 2025. After a continuation, the 341 meeting concluded on November 17, 2025. An amended creditor matrix was filed on November 6, 2025.

SEC Adversary Proceeding

Non-Dischargeability Complaint.

On December 5, 2025, the SEC filed an Adversary Complaint (Case No. 25-05047) seeking a determination that its disgorgement judgment is non-dischargeable under the Bankruptcy Code. Multiple SEC attorneys sought and received permission to appear in the bankruptcy court, with appearance orders entered the same day.

The adversary proceeding is the primary contested matter in the bankruptcy case. The SEC's complaint alleges that Navellier & Associates operated a course of business that constituted fraud, misrepresenting the Vireo AlphaSector investment track record to clients dating back to at least 2013 when acting as an investment adviser.

Section 523(a)(19) Legal Framework.

The SEC's non-dischargeability claim invokes Section 523(a)(19) of the Bankruptcy Code, which governs the dischargeability of debts arising from securities law violations. This provision was enacted in 2002 as part of the Sarbanes-Oxley Act, with the stated purpose of closing a "loophole" that had allowed debtors convicted of securities fraud or other securities violations to discharge debts owed to their victims.

Section 523(a)(19) makes non-dischargeable any debt arising from:

• Violations of federal securities laws, including the Securities Act of 1933, Securities Exchange Act of 1934, Investment Company Act of 1940, and Investment Advisers Act of 1940
• Violations of state securities laws, regulations, or orders issued under such laws
• Common law fraud, deceit, or manipulation in connection with the purchase or sale of a security

The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) clarified that securities law debts are non-dischargeable irrespective of whether the federal judgment or order occurs "before, on or after the date on which the petition was filed." Bankruptcy courts have interpreted this as allowing determination of both liability and damages during adversary proceedings. The standard of proof for Section 523(a)(19) dischargeability exceptions is preponderance of the evidence.

Legal Issues Presented.

The SEC adversary proceeding applies Section 523(a)(19) to a disgorgement judgment arising from violations of Section 206 of the Investment Advisers Act of 1940, a federal securities law expressly covered by the non-dischargeability provision.

Navellier's litigation position throughout the enforcement action emphasized that its clients did not suffer pecuniary harm from the misrepresented track record.

The SEC's position is that Section 523(a)(19) covers any debt arising from a securities law violation, regardless of whether the underlying judgment required a showing of investor harm. The disgorgement was ordered because Navellier violated the Investment Advisers Act's antifraud provisions; the debt therefore falls within the statutory exception to discharge.

Key Professionals

Debtor's Counsel and Claims Agent.

The debtor retained a two-firm legal team to navigate the chapter 11 case:

Sallie B. Armstrong brings over four decades of bankruptcy experience to the engagement. She began her career with a clerkship for Hon. Bertram Goldwater at the U.S. Bankruptcy Court for the District of Nevada, Reno Division—the same court now presiding over the Navellier case. Armstrong represents clients in bankruptcy, financial restructuring, corporate reorganization, and creditor rights matters, and is recognized in Best Lawyers in America for Bankruptcy and Creditor Debtor Rights. She holds an LL.M. in Taxation from NYU School of Law (1980).

McDonald Carano LLP was founded in Reno in 1949 and has grown to approximately 60 attorneys and government affairs professionals serving clients from offices in Reno, Las Vegas, and Carson City. The firm celebrated its 75th anniversary in 2024.

Harris Law Practice LLC, with Norma Guariglia serving as general bankruptcy counsel, provides additional support for the debtor. Omni Agent Solutions, retained as claims agent, provides bankruptcy administration services including claims management, noticing, and plan solicitation.

SEC Counsel.

The SEC has appeared through multiple attorneys in the adversary proceeding, including Patricia Schrage. Appearance orders were entered on December 5, 2025, authorizing government counsel to participate in the bankruptcy proceedings.

Industry Context: RIA Enforcement and Bankruptcy

Investment Adviser Enforcement Landscape.

The Navellier case sits within SEC enforcement against registered investment advisers following the 2008 financial crisis. The F-Squared AlphaSector scandal involved falsified performance data that multiple firms incorporated and marketed to clients.

Beyond the $35 million F-Squared settlement and the 13 advisory firms fined $2.2 million for spreading false claims, the agency pursued individual liability against principals who knew or should have known about performance fabrications. The Navellier case includes personal liability imposed on a firm's founder for track record fraud.

Fiduciary Duty Implications.

The SEC's enforcement theory centers on breach of fiduciary duty. Registered investment advisers occupy a position of trust with their clients, and the SEC holds them to strict standards. The agency's enforcement release emphasized that RIAs must provide full disclosure of all material facts and cannot engage in activities that conflict with client interests.

Clients selecting investment strategies rely on historical performance data to assess manager skill and strategy viability. When that data is fabricated—even if the strategy's actual performance does not harm clients—the adviser has violated fiduciary obligations.

Bankruptcy as Strategic Response.

The timing of Navellier's chapter 11 filing—three months after the Supreme Court denied certiorari—places the bankruptcy after the judgment became final. For an operating investment adviser with nearly $1 billion in assets under management and ongoing client relationships, chapter 11 provides:

• Automatic stay: The filing halts collection efforts while the debtor continues operations
• Operating platform preservation: The firm can maintain its SEC registration and client relationships during reorganization
• Structured dispute resolution: The adversary proceeding provides a forum to litigate non-dischargeability in bankruptcy court

The SEC adversary proceeding addresses whether the disgorgement judgment is non-dischargeable. If the disgorgement judgment is determined to be non-dischargeable, chapter 11 will not eliminate the firm's largest liability.

Key Timeline

Frequently Asked Questions

Why did Navellier & Associates file for chapter 11?

The filing came three months after the U.S. Supreme Court denied Navellier's petition to review a $22.7 million SEC disgorgement judgment for fraud related to the Vireo AlphaSector investment strategies. With appellate options exhausted, chapter 11 provided a mechanism to address the judgment while continuing operations as an SEC-registered investment adviser.

What was the Vireo AlphaSector fraud?

Navellier & Associates marketed investment strategies claiming a live track record from April 2001 through September 2008. The SEC alleged that no client assets actually tracked the strategy during that period and that the performance was substantially overstated even as a back-test. Advertisements explicitly and falsely stated the historical performance was "not back-tested."

How is this case connected to F-Squared?

F-Squared Investments created the AlphaSector performance data that Navellier and other advisers relied upon. F-Squared agreed to a $35 million SEC settlement in December 2014 after the agency revealed the track record was fabricated—the underlying algorithm was created by a college student and contained a calculation error that inflated returns by approximately 350%. F-Squared filed chapter 11 in July 2015.

What is the SEC seeking in the adversary proceeding?

The SEC filed a complaint to determine that its $22.7 million disgorgement judgment is non-dischargeable under Section 523(a)(19) of the Bankruptcy Code. This provision, enacted as part of Sarbanes-Oxley in 2002, excepts debts arising from securities law violations from discharge in bankruptcy.

Is Navellier & Associates still operating?

Yes. The company continues operating as an SEC-registered investment adviser throughout the chapter 11 case. As of September 2025, the firm reported approximately $968 million in discretionary assets under management across roughly 1,303 client accounts. Monthly operating reports filed in the bankruptcy case indicate ongoing business activity and revenue generation.

What does Section 523(a)(19) cover?

Section 523(a)(19) makes non-dischargeable any debt arising from violations of federal or state securities laws, including the Investment Advisers Act of 1940, as well as common law fraud in connection with securities transactions. The provision applies regardless of whether the underlying judgment was entered before, on, or after the bankruptcy petition date.

What was the total SEC judgment amount?

The original June 2020 judgment exceeded $30 million, including disgorgement, prejudgment interest, and civil penalties against both the firm and Louis Navellier personally. After the case was remanded in light of Liu v. SEC, the amended disgorgement award was $22,734,487 plus prejudgment interest.

What is the circuit split in disgorgement law?

The First Circuit (in the Navellier case) held that SEC disgorgement does not require a showing of investor financial harm—the remedy focuses on unjust enrichment. The Second Circuit (in SEC v. Govil) held that investor harm is required. The Supreme Court declined to resolve this split when it denied Navellier's certiorari petition.

Who are the key professionals in the bankruptcy case?

McDonald Carano LLP (Sallie B. Armstrong) and Harris Law Practice LLC (Norma Guariglia) serve as co-counsel for the debtor. Omni Agent Solutions is the claims and noticing agent. Armstrong brings over 40 years of bankruptcy experience, including a clerkship in the Reno Division of the Nevada Bankruptcy Court.

What is the current status of the case?

As of December 2025, the case remains in early stages. The SEC adversary proceeding is pending as the primary contested matter. No plan of reorganization has been filed. The debtor continues to operate and has filed monthly operating reports through November 2025.

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For more analysis of complex restructuring cases involving regulatory enforcement and securities litigation, visit the ElevenFlo restructuring blog.