Navellier & Associates Proposes $31.4M SEC Judgment Plan
Navellier & Associates Proposes Revenue Plan for $31.4M SEC Judgment
ElevenFlo Research
March 6, 202620 min readUpdated August 11, 2026
Key points
Navellier & Associates filed chapter 11 in September 2025 after the Supreme Court left a $22.7M SEC disgorgement award intact. Its June 2026 plan proposes revenue-funded payments on the $31.4M total judgment while the SEC seeks dismissal and nondischargeability.
Navellier & Associates Inc., the Reno-based registered investment adviser founded by quantitative growth-stock manager Louis Navellier, has put a restructuring on the table that would pay a roughly $31.4 million SEC fraud judgment out of operating revenue rather than through a sale or liquidation. The firm filed its chapter 11 plan of reorganization and disclosure statement on June 5, 2026, while simultaneously fighting the SEC's motion to dismiss or convert the case—a dispute the parties have continued three times by stipulation as they pursue a consensual resolution.
The case began on September 5, 2025, when Navellier & Associates disclosed its chapter 11 filing in the U.S. Bankruptcy Court for the District of Nevada (Case No. 25-50820), 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 findings tied to the "Vireo AlphaSector" investment strategies, which the SEC alleged were marketed with a fabricated track record. The SEC has since opened an adversary proceeding to have its judgment declared non-dischargeable and has separately moved to throw the case out as a bad-faith collateral attack on the judgment.
Debtor(s)
Navellier & Associates Inc.
Court
U.S. Bankruptcy Court, District of Nevada (Reno Division)
Navellier's Advisory Business and Newsletter Franchise
Louis Navellier founded Navellier & Associates in Reno, Nevada, beginning with quantitative analysis on growth stocks in 1980 and adding private-account management for high-net-worth individuals in 1987. The firm grew to manage over $2.5 billion in private accounts and no-load mutual funds, supported by a team of approximately 11 analysts. 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.
The company's investment approach centered on a multi-step screening process combining fundamental and quantitative analysis, offered across growth, value, international, and global strategies sold to retail investors. The debtor describes itself in its bankruptcy filings as a registered investment adviser and money-management firm, and it has remained in possession with no trustee or official committee appointed.
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, and he marketed several additional paid newsletters covering growth and options strategies.
The Vireo AlphaSector Fraud and F-Squared Scandal
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, and that the historical performance was not back-tested. Both claims were false: no client assets had tracked the Vireo AlphaSector strategy during the advertised period, and 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 ignored and concealed those indicators rather than correcting the misrepresentations.
The F-Squared connection. The Vireo AlphaSector track record traced back to a broader scandal involving F-Squared Investments, once the largest U.S. money manager building portfolios from exchange-traded funds, with more than $28 billion invested in its strategies at its height. The AlphaSector performance data that multiple advisers—including Navellier—relied upon and marketed was based on false data. In December 2014, F-Squared agreed to pay $35 million to settle SEC charges over the falsified AlphaSector performance. The SEC found that the algorithm was created by a college student at another firm—not by F-Squared as advertised—and that a calculation mistake in the hypothetical data inflated the outcomes by approximately 350%. In 2016, the SEC fined 13 additional advisory firms a combined $2.2 million for spreading the false claims. F-Squared filed chapter 11 in July 2015, and its AlphaSector strategies were 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 holding roughly $1.4 billion in assets under management. The SEC's later dischargeability complaint alleges that the misconduct produced $22,775,867 in advisory fees, in addition to the $14 million realized from the sale of the Vireo business.
SEC Fraud Judgment and the Disgorgement Appeals
In September 2017, the SEC announced fraud charges against Navellier & Associates Inc. and Louis Navellier personally, alleging violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940—the antifraud provisions that impose fiduciary standards on registered investment advisers. The complaint charged that the defendants defrauded clients about the Vireo AlphaSector track record, distributed materially false advertisements and client communications, and knew the track record could not be validated.
On June 2, 2020, the U.S. District Court for the District of Massachusetts ruled in favor of the SEC on the fraud claims against both defendants, dismissing two of the SEC's four claims and ruling for the agency on the remaining two. The original judgment ordered disgorgement of $22,450,952, prejudgment interest of $6,513,619, a $2,000,000 civil penalty against the firm, and a $500,000 civil penalty against Navellier personally—total monetary relief exceeding $31.4 million. Navellier announced its intention to appeal, contesting the disgorgement methodology from the outset.
The appeal coincided with the Supreme Court's June 2020 decision in Liu v. SEC, which held that disgorgement in SEC enforcement actions must be "awarded for victims" as an equitable remedy, must not exceed the wrongdoer's net profits, and must be directed toward victims. The Navellier case was remanded in light of Liu. The defendants argued that because the Vireo AlphaSector clients suffered no 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.
In July 2024, the U.S. Court of Appeals for the First Circuit unanimously upheld the amended disgorgement order, holding that disgorgement is tied to unjust enrichment rather than victim compensation and that clients need not have suffered financial harm. The court emphasized that Navellier collected fees and sold the Vireo business for $14 million based on a track record it knew to be fraudulent. The ruling created a direct conflict with the Second Circuit's 2023 holding in SEC v. Govil, which required the SEC to demonstrate investor financial harm to obtain disgorgement. Navellier petitioned the Supreme Court for certiorari, arguing the First Circuit's ruling conflicted with Liu and the Second Circuit. On June 6, 2025, the Supreme Court denied the petition, leaving the First Circuit's ruling intact and the $22.7 million disgorgement judgment final. Three months later, the firm filed chapter 11. In February 2026—while the bankruptcy was underway—the Supreme Court granted certiorari in SEC v. Sripetch to resolve whether the SEC must prove investor pecuniary harm to obtain disgorgement, the central question Navellier pressed through seven years of litigation. The Court decided Sripetch on June 4, 2026, and the SEC's notice of supplemental authority filed in the Navellier bankruptcy case describes the ruling as holding that traditional equitable principles and Liu do not require a showing of pecuniary loss to justify a disgorgement award—an outcome adverse to the position Navellier had pressed since 2020.
Chapter 11 Filing and Continued Advisory Operations
Navellier & Associates filed its chapter 11 petition in the District of Nevada on September 5, 2025, with the case assigned to Hon. Hilary L. Barnes and Louis Navellier identified as the principal and responsible party. The firm's first-day relief focused on maintaining prepetition bank accounts; on December 2, 2025, the court entered a final bank accounts order authorizing the debtor to continue operating its advisory business through the case. The debtor filed its schedules and statements on October 20, 2025, and the Section 341 meeting of creditors concluded on November 17, 2025.
The firm has continued to operate as an SEC-registered investment adviser throughout the case. It filed an updated Form ADV on September 18, 2025—less than two weeks after the petition—reporting approximately $968 million in discretionary assets under management across 1,303 client accounts. The debtor later told the court that its assets under management had increased about 13% after the petition date and that it had generated cumulative postpetition net profit of $497,129 through January 31, 2026. In its disclosure statement, the debtor reported net profit of $1,189,008 over the roughly eight-month period from the September 5, 2025 petition date through April 30, 2026.
The debtor also moved to retain its Reno headquarters. On January 3, 2026, it filed a motion to assume its office lease with landlord One Liberty C2K, LLC for premises at 1 East Liberty Street, Suite 504, in Reno, reporting base rent of about $9,465 per month plus parking and CAM charges and no known defaults requiring cure. The court granted the lease assumption on February 3, 2026.
Postpetition profitability has since softened. The debtor's May 2026 monthly operating report showed a $144,065 monthly loss but $1,044,943 in cumulative postpetition net profit through May 31, 2026, against $3,362,138 in total assets. Its June 2026 monthly operating report showed a second consecutive monthly loss of $63,283, bringing cumulative postpetition net profit down to $981,660 through June 30, 2026, with total assets of $3,309,976. Both reports list 13 full-time employees, no prepetition secured debt, and $31,734,471 in prepetition unsecured debt.
SEC's Dismissal Motion and Nondischargeability Adversary
Motion to dismiss or convert. On January 13, 2026, the SEC moved to dismiss the chapter 11 case for cause under Section 1112(b) or, alternatively, to convert it to chapter 7. The motion characterizes the filing as an improper collateral attack on the Massachusetts judgment, argues that the SEC is the only meaningful creditor, and contends that the case was filed to hinder enforcement of the judgment, interfere with the SEC's distribution process for harmed investors, and protect Louis Navellier's personal assets. The SEC also argued that the debtor omitted the pending Nevada litigation and its alleged $50 million claim from its schedules and statement of financial affairs.
Debtor's opposition. In its March 4, 2026 opposition, supported by a declaration from Louis Navellier, the debtor answered that the case is not a two-party dispute because it involves thousands of potential investor claims as well as other creditors. The opposition stated that only six proofs of claim had been filed at that point, totaling $323,717.38 exclusive of the SEC judgment, and that the schedules listed aggregate assets of $2,391,906.86. The debtor leaned heavily on its postpetition operating performance and argued that the business has little liquidation value but needs future operating revenue to satisfy creditors. The debtor filed an amended statement of financial affairs on March 11, 2026.
The adversary proceeding. On December 5, 2025, the SEC filed its adversary complaint (Case No. 25-05047) seeking a determination that the judgment debt is non-dischargeable under 11 U.S.C. §§ 523(a)(2) and 1141(d)(6)(A). Section 523(a)(2) excepts from discharge debts for money obtained by fraud or false pretenses, while Section 1141(d)(6)(A) prevents a corporate chapter 11 debtor from discharging a debt of that kind owed to a governmental unit. The complaint alleges that Navellier & Associates fraudulently marketed the Vireo AlphaSector track record to clients and generated more than $22.7 million in fee income from the misconduct, and it identifies the amended final judgment as $31,369,890—$22,734,487 in disgorgement, $6,635,403 in prejudgment interest, and a $2,000,000 civil penalty. Navellier's position throughout the enforcement action has been that its clients suffered no pecuniary harm from the misrepresented track record; the SEC's position is that the statutory exception reaches any debt arising from a securities-law violation regardless of investor harm.
Stipulated continuances and settlement posture. A hearing on the SEC's dismissal motion was originally set for March 18, 2026. Rather than litigate it, the parties repeatedly stipulated to continue the hearing—first to May 6, 2026, then to June 3, 2026, and then to July 8, 2026. The order approving the third continuance states that the parties have engaged in "preliminary discussions to try to consensually resolve their disputes" and that continuing the hearing may help resolve or narrow the issues in dispute, while stopping short of stating that any settlement has been reached. No settlement agreement appeared on the docket as of June 11, 2026.
Pre-hearing filings and the July 8 hearing. Ahead of the July 8, 2026 hearing, the SEC filed an exhibit consisting of the opposition memorandum from the related district-court litigation and, separately, a notice of supplemental authority citing the Supreme Court's June 4, 2026 decision in Sripetch v. SEC. The SEC argued that Sripetch confirms traditional equitable principles and Liu v. SEC do not require a showing of pecuniary loss to justify a disgorgement award, directly challenging the debtor's argument that it could use the chapter 11 claims process to cap its disgorgement debt at the amount of proven investor losses. The notice states that the debtor had previously projected investor losses at less than 1% of the roughly $29 million disgorgement judgment, which the SEC contends demonstrates an improper purpose for the chapter 11 filing. The hearing was held July 8, 2026; the docket shows original and amended transcript notices, but the transcript is restricted and no ruling is available in the case record reviewed through July 22, 2026.
Plan of Reorganization and the Bifurcated SEC Judgment
After two exclusivity extensions, the debtor filed its chapter 11 plan of reorganization and disclosure statement on June 5, 2026. The plan is a reorganization funded entirely from the debtor's ongoing operating revenues rather than a sale or third-party contribution. It bifurcates the SEC judgment, treating the $2,000,000 civil penalty separately from the roughly $29.4 million disgorgement award, which the disclosure statement notes is held jointly and severally with Louis Navellier and is earmarked for the Vireo AlphaSector investors the SEC sought to make whole.
Class
Description
Status
Treatment
1A
Unsecured claims of $6,000 or less
Impaired
Lump sum within 30 days after the Effective Date, plus 5% annual interest
1B
Unsecured claims over $6,000
Impaired
Lump sum on February 1, 2027, plus 5% annual interest
2
SEC civil penalty ($2,000,000)
Impaired
Quarterly installments of $400,000 beginning April 1, 2027, with statutory interest; subordinated under 11 U.S.C. § 726(a)(4)
3
Disgorgement award / Vireo investors (~$29.4M)
Impaired
Quarterly installments of $100,000 beginning April 1, 2027, prorated among investors who filed claims, with statutory interest; subordinated under § 726(a)(4)
4
Equity interests
Unimpaired
Unmodified, but no economic distribution until higher-priority claims are paid in full
Plan Class Treatment
Unclassified priority claims are to be paid in full with statutory interest in equal monthly installments over one year from the Effective Date, and the plan estimates administrative claims including professional fees of $200,000 to $500,000 and claims-agent fees of $100,000 to $150,000. The disclosure statement frames feasibility around postpetition profitability—the $1,189,008 of net profit through April 30, 2026 and projected comparable earnings—and does not include a formal liquidation analysis or stated recovery percentages. It argues that in a chapter 7 liquidation, allowed claims "would receive substantially less favorable treatment than they would receive under the Plan" and that equity holders "would likely receive nothing." It also discloses that the SEC previously represented it "intends to distribute to the Vireo AlphaSector clients any disgorgement awarded."
The plan followed a sequence of exclusivity extensions tied to the SEC negotiations. The debtor filed a first motion to extend exclusivity on January 5, 2026, citing the then-pending claims bar dates and the need to assess claims; the court granted that motion on February 23, 2026, extending the plan-filing deadline to April 6, 2026. The debtor filed a second motion on April 6, 2026, grounding cause in its settlement discussions with the SEC and noting that, although it had scheduled more than 6,000 potential creditors, only one former investor had filed a proof of claim and the SEC did not oppose the extension. The order extending exclusivity through August 3, 2026 for both filing and soliciting a plan was entered on June 11, 2026.
Debtor's Counsel, Claims Agent, and Interim Fees
The debtor retained a two-firm legal team for the Nevada case. McDonald Carano LLP, with Sallie B. Armstrong leading, serves as lead counsel, and Harris Law Practice LLC, with Norma Guariglia, serves as general bankruptcy co-counsel. The court approved the McDonald Carano retention and the Harris employment on January 20, 2026.
Sallie B. Armstrong brings more than four decades of bankruptcy experience and 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 case. McDonald Carano LLP was founded in Reno in 1949 and has grown to approximately 60 attorneys and government-affairs professionals across offices in Reno, Las Vegas, and Carson City.
McDonald Carano's first interim fee application sought $29,250.00 in fees and $41.60 in expenses, and Harris Law Practice's first interim application sought $41,897.50 in fees and $68.20 in expenses; the court granted both in early March 2026. With more than 6,000 potential creditors scheduled, the court approved Omni Agent Solutions as claims and noticing agent on December 4, 2025.
Key Timeline
Date
Event
1980
Louis Navellier begins publishing quantitative analysis on growth stocks
1987
Navellier begins managing private accounts for high-net-worth individuals
April 2001–September 2008
Period for which Vireo AlphaSector track record was falsely advertised
August 2013
Navellier sells Vireo line of business for $14 million (~$1.4B AUM, ~6,000 accounts)
December 2014
F-Squared agrees to $35 million SEC settlement for AlphaSector fraud
July 2015
F-Squared files chapter 11
September 2017
SEC files fraud charges against Navellier & Associates and Louis Navellier
June 2, 2020
District Court judgment exceeding $31.4 million in disgorgement, interest, and penalties
June 2020
Supreme Court decides Liu v. SEC; case remanded; amended disgorgement of $22.7 million entered
July 16, 2024
First Circuit affirms amended disgorgement order
June 6, 2025
Supreme Court denies certiorari
September 5, 2025
Navellier & Associates files chapter 11 (D. Nevada)
Debtor files plan of reorganization and disclosure statement
June 4, 2026
Supreme Court decides Sripetch v. SEC
June 11, 2026
Court extends exclusivity through August 3, 2026
June 25, 2026
Debtor files May 2026 monthly operating report ($1,044,943 cumulative profit)
July 1, 2026
SEC files exhibit and notice of supplemental authority citing Sripetch
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, the firm used chapter 11 to address the judgment while continuing to operate as an SEC-registered investment adviser.
What is the SEC seeking in the bankruptcy case?
The SEC has pursued two tracks. It filed an adversary complaint to have its judgment declared non-dischargeable under 11 U.S.C. §§ 523(a)(2) and 1141(d)(6)(A), and it separately moved to dismiss the chapter 11 case for cause or convert it to chapter 7, calling the filing a bad-faith collateral attack on the Massachusetts judgment.
What does the proposed plan do with the SEC judgment?
The June 5, 2026 plan splits the judgment into two classes: the $2,000,000 civil penalty (Class 2), paid in quarterly installments of $400,000 beginning April 1, 2027, and the roughly $29.4 million disgorgement award (Class 3), paid in quarterly installments of $100,000 prorated among investors who filed claims, also beginning April 1, 2027. Both classes are subordinated, and the plan is funded from operating revenue.
How is this case connected to F-Squared?
F-Squared Investments created the AlphaSector performance data that Navellier and other advisers relied upon and marketed. F-Squared agreed to a $35 million SEC settlement in December 2014 after the agency found 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%—and F-Squared filed chapter 11 in July 2015.
Does the bankruptcy filing show Louis Navellier's net worth?
The docket record reviewed through July 22, 2026 shows that the disclosure statement had not been approved and the plan had not been confirmed. The SEC's dismissal-or-conversion hearing, reset three times, was held July 8, 2026 after the SEC filed a notice of supplemental authority citing the Supreme Court's Sripetch v. SEC decision; the docket shows restricted transcript notices but no accessible ruling. The non-dischargeability adversary proceeding remained pending, plan exclusivity ran through August 3, 2026, and the debtor's June 2026 monthly operating report showed cumulative postpetition net profit of $981,660, down from $1,044,943 the prior month.
This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. Read our full disclaimer.
