Inc. 500, 2010. Crain’s Fast Fifty, 2011. Crain’s Fast Fifty, 2012. AlphaMetrix Group LLC, Chicago, appeared to be a company going places fast. That is, until 2013, when the self-described “Marketplace for Private Investments” found itself on the very top of lists belonging to the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC).
AlphaMetrix, which boasted a five-year growth rate of 8,030.4% in Crain’s Chicago Business 2011 Fast Fifty issue, now faces CFTC charges alleging that the firm committed fraud and misappropriated at least $2.8 million that belonged to pool participants.
Just the facts
In the “beginnings” section of its website, AlphaMetrix positions itself as “building a foundation of certainty and trust.” On Oct. 10, 2013, AlphaMetrix founder and CEO Aleks Kins issued a letter to pool participants that would seem to indicate that there are a few cracks in that foundation, perhaps even enough to bring down the house that Kins built. Kins’ letter, in part, reads:
“We write to update you on certain developments at AlphaMetrix Group LLC (‘AlphaMetrix’), the ultimate parent of the AlphaMetrix family of companies. In the operation of our business, we regularly run intercompany balances between and amongst our affiliates. Our regulated commodity pool operator, AlphaMetrix LLC (the ‘CPO’) is one such affiliate with whom there are intercompany balances. The CPO’s assets consist largely of a receivable owed to it by Parent. Parent has recently encountered significant cash flow issues and is working to strengthen its current financial position and its continued operations. As a result of this, the CPO has delayed fee rebates owed to certain of its third-party money managers and participants, which should have been reinvested into various pools, but were not. The fact that these fee rebates were not reinvested may have an impact on the pools’ net asset values.
“Additionally, the CPO has not paid management and incentive fees that were earned and owed to third-party money managers, yet it has withdrawn those fees for payment from various pools.”