The National Futures Association (NFA) has suspended Chicago-based Lake Shore Asset Management Ltd.’s NFA membership; and Lake Shore may not solicit participant funds or place trades until it is in complete compliance with all NFA requirements. In addition, despite a court order ending a 20-day asset freeze, LSAM has not been able to transfer or disperse $230 million in assets held by NFA members.
“Our action has similar effects, but we don’t call it an asset freeze,” says Dan Driscoll, NFA’s chief operating officer. “Basically what we did is prohibit Lake Shore from distributing or transferring any funds without our approval. And we told our members not to give them any money without our approval.”
In June, the NFA issued its first amended Member Responsibility Action (MRA) against Lake Shore and Laurence M. Rosenberg, principal, based on their failure to produce books and records as the NFA requested. According to the NFA, it appears that Lake Shore funds lost $29 million trading on U.S. futures exchanges while claiming profitability on promotional materials and a Web site. Lake Shore may request a hearing with the NFA and petition the CFTC for a stay of this action.
An NFA spokesperson says that as of mid August, Lake Shore still has not provided books and records and that after providing access for a day, Lake Shore has revoked the NFA’s access to the Lake Shore Web site.
“This is all blown out of proportion. I was on the advisory committee,” Rosenberg says, adding that he didn’t deny the NFA access to the Lake Shore Web site and that only Philip J. Baker could make the decision to provide access and documents. “I haven’t spoken with him in weeks.”
“I’m getting crucified because I’m the only jerk around,” Rosenberg says. “A, It’s not a hedge fund; and B, I didn’t run it,” he adds.
