From the December 2013 issue of Futures Magazine • Subscribe!

House of AlphaMetrix falls hard and fast

In addition, the letter stated that CFO George Brown had been dismissed and the services of Arthur Bell, CPA, had been retained to “review and assist us in improving our internal controls and recordkeeping procedures.”

The departures of two other senior staffers, Mikus Kins, chief product and business development officer, and Geoff Marcus, chief strategic officer, followed shortly thereafter. At its peak, AlphaMetrix claimed more than 120 employees, with headquarters in Chicago, and offices in New York, Columbus, OH, London and the Cayman Islands. How many of those employees remain is unclear. 

On Oct. 21 the NFA issued a Member Responsibility Action (MRA) against the firm. The MRA was issued to curtail AlphaMetrix’ problems and keep them from expanding. The order required AlphaMetrix LLC “to satisfy its obligations to certain pool participants by Nov. 1,” which means that the NFA can suspend the member, restrict its operations or direct it to take “other remedial action.”

The NFA issued a statement that said, “The firm had deducted advisory fees for certain participants in commodity pools operated by the firm. Those fees were to be reinvested in the pools but were not. The total amount owed to participants is approximately $600,000. AlphaMetrix has approximately $700 million under management. According to NFA’s action, if AlphaMetrix fails to satisfy its obligations by Nov. 1, the firm would be prohibited from placing trades for any of its pools except for trades liquidating open positions. Further, any disbursement of pool funds could only be made with NFA’s approval.”

On Oct. 31, AlphaMetrix announced in a statement that it would cease trading operations as of that date and enter that portion of its business into an orderly liquidation.

The statement read: “In light of recent redemption requests, AlphaMetrix has determined that its sponsored funds will no longer be able to effectively trade the investment strategy employed by each trading advisor. As a result, AlphaMetrix has decided that it is in the best interest of all investors for the funds to cease trading as of Oct. 31, 2013, and enter into an orderly liquidation. For all investors who have not already redeemed, it is anticipated that AlphaMetrix will distribute 90% of the proceeds to investors on or about Nov. 21, 2013. The balance will be completed upon the completion of a final audit.”

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