1. This matter arises from material misstatements and omissions by registered investment adviser MFS to certain of its advisory clients and others concerning hypothetical stock returns associated with MFS's blended research stock ratings. In 2001, MFS introduced its blended research strategies to investors. The blended research strategies combine research ratings from MFS's fundamental analysts and quantitative models to manage portfolios of stocks for client investment.2. From approximately 2006 to 2015, MFS advertised that the basis of its blended research philosophy was that fundamental and quantitative management styles excel in differing market conditions, and that blending fundamental and quantitative stock ratings could over time yield better returns than either type of ratings alone. To illustrate the validity of its claim that blending two sources of ratings was better than one source alone, MFS advertised the results of a hypothetical portfolio of stocks rated "buy" by both MFS's fundamental analysts and quantitative models. In its advertisements, MFS showed how this hypothetical portfolio had annualized returns from 1995 forward that exceeded the annualized returns of either a hypothetical portfolio of fundamental "buy" rated stocks or a hypothetical portfolio of quantitative "buy" rated stocks.3. MFS's advertisements that demonstrated the superior returns of the hypothetical portfolio of stocks rated "buy" by both MFS's fundamental analysts and quantitative models were misleading because the materials failed to disclose that some of the quantitative ratings used to create the hypothetical portfolio were determined using a retroactive, back-tested, application of MFS's quantitative model. Specifically, for the period 1995-2000, MFS used back-tested quantitative ratings. For the period 2000-2003, MFS used some live quantitative ratings and some back-tested ratings. In some advertisements, MFS also falsely claimed that the hypothetical portfolio was based on MFS's own quantitative stock ratings dating back to the mid-1990s, even though before 2000 MFS did not have a quantitative research department or generate its own quantitative stock ratings. MFS started the performance period in 1995 instead of 2000 or 2003 because its stored fundamental ratings dated back to 1995 and the longer period reflected multiple market environments; but inclusion of the market environments in the backtested period also contributed to the superior performance of the blended "buy" ratings portfolio. MFS advertised these hypothetical returns to institutional clients and prospective institutional clients, financial intermediaries (including broker-dealers, insurance companies, and investment advisers) and consultants. As a result, MFS violated Sections 206(2) and 206(4) of the Advisers Act and Rule 206(4)-1(a)(5) thereunder by publishing, circulating, and distributing advertisements that contained misleading statements of material fact.4. MFS's misleading advertisements were due in part to a failure to adopt and implement written compliance policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules thereunder, as required by Section 206(4) of the Advisers Act and Rule 206(4)-7. Specifically, MFS failed to adopt and implement policies and procedures reasonably designed to prevent inaccurate advertisements that it directly or indirectly published, circulated, or distributed.