The Securities and Exchange Commission on Tuesday ordered an investment advisor with ties to Well Fargo to answer the SEC’s questions about her alleged part in overstating the NAV of a fund she managed after a collateralized debt obligation owned by the fund went into default in 2008.

As lead portfolio manager of the Evergreen Ultra Short Opportunities Fund, the advisor, Lisa Premo, defrauded clients when acting on behalf of Evergreen Adviser, the registered investment advisor for the Evergreen family of mutual funds, the SEC charges in its cease-and-desist order.

Premo at that time was CIO of liquidity and structured solutions for Evergreen Investment Management Co., a Wachovia Corp. subsidiary. Evergreen is now a wholly-owned subsidiary of Wells Fargo & Co. On Oct. 3, 2008, Wells announced that it had agreed to buy Wachovia in a $15.1 merger deal. The merger was completed on Dec. 31, 2008.

On Feb. 6, 2007, Premo decided to purchase on behalf of the Ultra Fund $13 million of a $375 million CDO, according to the SEC. From at least March 2008 to early June 2008, the NAV of the Ultra Fund “was materially overstated as a result of the conduct of Premo,” the SEC said. Evergreen Adviser received payment of advisory fees based on the net asset value, or NAV, of each fund.

“Premo willfully aided and abetted and caused the Evergreen Adviser’s violation of [sections] of the Advisers Act,” according to the SEC. “Through its failure to factor readily-available negative information concerning the CDO into its valuation of that security, the Evergreen Adviser provided an overstated NAV to the Ultra Fund, which, in turn, generated higher advisory fees paid by the fund to the adviser. Through these actions, the Evergreen Adviser breached its fiduciary duty to and defrauded the Ultra Fund.”

A spokesperson for Wells Fargo said that Premo was employed by Evergreen Investments and left that firm in 2008. The enforcement action predates Wells Fargo’s acquisition of Wachovia, the spokesperson said.

“The Wells Fargo Funds Management Group has a long history of focusing on corporate governance and strictly enforcing all compliance and regulatory requirements,” the spokesperson said in an email. “Our policies and procedures–and conservative approach to risk management–have led the firm to successfully avoid the regulatory challenges experienced by many firms in the mutual fund industry.”

On Oct. 22, 2008, AdvisorOne reported that Wachovia saw a third-quarter loss that year, with total client assets down 16%. With its merger with Wells Fargo set to take place later that year, Wachovia announced $737 million in valuation losses relating to the support of Evergreen money market funds, compared with $24 million in the second quarter of 2008, along with $83 million in valuation losses relating to the liquidation of an Evergreen fund.

“In these unprecedented times, my colleagues have demonstrated that Wachovia always puts the interests of our customers and clients first,” said Wachovia CEO and President Robert Steel in a Q3 2008 statement. “Although this has been a challenging quarter, Wachovia’s underlying businesses remain solid and our franchise exceptionally attractive. We look forward to the opportunities that lie ahead as we join forces with Wells Fargo.”

The SEC has ordered Premo to file an answer to the agency’s allegation within 20 days. A public hearing to take evidence on the questions will be convened in 30 to 60 days.