From the December 2013 issue of Futures Magazine • Subscribe!

House of AlphaMetrix falls hard and fast

As a privately held company founded in 2005, little is available about the financials of the firm, but the June 6, 2011 edition of Crain’s Fast Fifty shows 2010 revenues of $41.7 million, 87 employees, profitability and a five-year growth rate of 8,030.4%. The 2011 edition of Crain’s Fast Fifty, released June 4, 2012, shows 2011 revenues of $51.2 million, 102 employees, no profitability and a five-year growth rate of 2,831%.

The firm’s offerings are AlphaMetrix technology (the managed account platform), investment research, investment products, financial investigations and its [known to be extremely lavish] events. 

The firm’s platform was supposed to give investors access to fully vetted funds and, according to the website, “achieve a higher level of verified trust.” Touting its high levels of due diligence the firm hired former Secret Service members and formed AlphaMetrix Financial Investigations, which performed comprehensive background investigations on traders and advisers wishing to join the platform.

While the firm’s initial roots were in technology and “secure” investing, it was the events that captured people’s attention and drew the crowds.

Talk of the town

Alphametrix’s first event was education, speed-dating and golf for charity at the Beverly Hills Country Club on the south side of Chicago. This was followed by the firm’s first summit in 2010 at the Doral in Miami, with educational speakers and speed-dating for managers and investors. Harry Markopolos, best noted for his attempts to get the U.S. Securities and Exchange Commission to investigate Bernie Madoff, was the keynote speaker, discussing the red flags surrounding the Madoff fraud. 

Subsequent conferences dropped the educational seminars and focused on speed-dating and high-profile speakers such as Tony Blair. Weekend networking events were sponsored by AlphaMetrix including water sports at the Monte Carlo Beach Club; “Crepes and Croquet” at the former home of Karl Lagerfeld; and spouse packages that included South Beach (Miami) walking tours, spa treatments and champagne cabanas.

A manager who preferred anonymity noted that while he had attended their conferences because there were “real” investors there, he didn’t understand the math. “It wasn’t clear to me how they made money with the platform. The numbers didn’t seem to work.”

At least according to the regulators, his arithmetic is right. 

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