Oct 21 AlphaMetrix, a Chicago-based fund manager
with $700 million under management, on Monday was ordered by its
regulator to repay about $600,000 in fees owed to outside money
managers by Nov. 1, or be barred from trading.
Earlier this month, AlphaMetrix told its customers that it
had "delayed" fee rebates to money managers that should have
been reinvested into its commodity funds.
On Monday the National Futures Association said it had
examined AlphaMetrix's books and determined that the failure to
reinvest those fee rebates means that AlphaMetrix or its parent
company had received a loan that violates NFA rules.
"The fact that these fee rebates were not reinvested has an
impact on the pools' net asset values," the National Futures
Association said late Monday in a so-called member
responsibility action, one of the most serious enforcement
actions the NFA can take.
The order bars the fund manager from taking in any new
investments until it makes the repayment.
If it fails to do so, the order said, AlphaMetrix will be
barred from placing trades for any of its 90 pools except for
liquidation of existing positions.
CME Group Inc and the National Futures Association
earlier this month cut ties with an AlphaMetrix unit that it had
hired last year to help launch a program to improve futures
Earlier this month, AlphaMetrix President and Chief
Executive Officer Aleks Kins said in a letter to customers that
the company has "encountered significant cash flow issues and is
working to strengthen its current financial position and its
It is unclear to what extent the financial troubles at
AlphaMetrix triggered the decision by CME and NFA to cut ties
with the company. At the time NFA said the plan had always been
to take the process of daily checks of customer money in house.
Spokesmen for AlphaMetrix, NFA and CME did not immediately
respond to requests for comment.