Added Bruce Karpati, co-chief of the Asset Management Unit in the division: "Investors in quant funds trust their advisers to develop, maintain and operate the quant models that drive a fund's performance. Rosenberg betrayed investors when he failed to disclose the material coding error."

Rosenberg settled without admitting to or denying the SEC's findings.

According to the SEC, Rosenberg created the model, oversaw research projects to improve and enhance it, and exercised significant authority throughout the AXA Rosenberg organization. The error in the computer code disabled a key risk-management component, and hurt the model's ability to perform as expected. After clients raised concerns about underperformance, Rosenberg directed others to conceal the error and declined to fix the error, the SEC said.