ACE and Yu-Dee Chang throw Hail Mary pass

Blog first appeared in DanCollinsReport on Sept. 21, 2013

Last week I wrote a blog recounting a story I wrote back in January 2005 regarding efforts by Futures Commission Merchant Vision Financial Markets to raise assets for commodity trading advisor ACE Investment Strategists and its founder Yu-Dee Chang. The reason this story is relevant today is that Vision and two of its associated people were recently charged by the National Futures Association for failure to observe high standards of commercial honor and just and equitable principles of trade; failure to maintain adequate records and make appropriate inquiries and failure to supervise, all related to its work with ACE and Yu-Dee Chang. ACE and Chang were charged in a separate related action.

Vision, Steve Silver a principal and associated person (AP) of Vision (at the time) and Bruce Newman an AP of Vision have 30 days to respond to the NFA complaint.

NFA Complaint

According to the NFA complaint ACE failed to properly distribute customer funds and in some case misappropriated those funds. ACE kept a governing account with Vision where it would place bunched orders. Often those bunched orders would result in split fills that created cash residuals of customer money from rounding of average pricing of split fills on bunched orders. The NFA alleges that instead of promptly distributing excess cash to the customers whose accounts generated the excess cash, ACE would hold the cash and then distribute them to other customers or not at all.

The complaint stated, “Not only did ACE improperly allocate the residuals that it distributed to customers but it also failed to make any allocation at all of approximately $1.6 million of residuals held in the governing account.”

It also stated that ACE misappropriated [some of the excess cash] for its own use. There is a more basic name for misappropriating someone else’s money for your own use; stealing. That basically says game over for ACE.

The NFA cited Chang in a separate related action.

 

What to do in such a situation?

If you are Chang, you send a note to brokers attempting to raise assets. Lawyer are expensive.

On Friday ACE sent out a marketing letter to certain introducing brokers extoling its very recent performance and encouraging them to sell his program. It said: Dear ACE Agents, As you can see from the chart below, we have started to make a strong comeback. There is no doubt what we can do for investors right now and going forward is much more important than what has been done in the past. Wouldn’t you agree.”

It concludes, “Life is about working through problems and adversities. Trading issues, regulatory issues, compliance issues, administrative issues and whatever issues life throws at us, here at ACE, we are committed in getting them resolved satisfactorily and move on successfully. We are back. We strongly believe so. Now, we have to get back to raising money!!”

ACE Letter (Click on letter to expand)

Ace Letter 1

 

 

The strong performance he speaks of is based on the last 20 days of trading (month of September). The performance figures for ACE’s 11 programs listed in the BarclayMap database as of the end of July range from -2.64% to -53.58%. Six of the 11 programs have a negative compound annual return, five of which are double digit negative returns.

So you could say ACE is due. Due for what is the question. The answer is obvious.

 

 

 

About the Author
Daniel P. Collins

Editor-in-Chief of Futures Magazine, Daniel Collins is a 25-year veteran of the futures industry having worked on the trading floors of both the Chicago Board of Trade and Chicago Mercantile Exchange. Dan joined Futures in 2001 and in 2005 he was promoted to Managing Editor, responsible for overseeing all the content that went into Futures and futuresmag.com. Dan’s incisive reporting and no-holds barred commentary places him among the most recognized national media figures covering futures, derivative trading and alternative investments.

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