November 4, 2013 / 11:06 PM / 5 years ago

CFTC files fraud lawsuit against AlphaMetrix

Nov 4 (Reuters) - The U.S. Commodity Futures Trading Commission sued AlphaMetrix LLC on Monday, accusing the liquidating Chicago-based firm of misappropriating at least $2.8 million and issuing false or misleading account statements to conceal fraud.

In a complaint filed in the U.S. District Court in Chicago, the CFTC said AlphaMetrix had agreed between Jan. 1 and Oct. 31 to rebate fees to participants in its commodity pools by reinvesting those sums in the pools, only to transfer the money to bank accounts of its parent AlphaMetrix Group LLC (“AMG”).

“As a result of this unlawful conduct, AMG received AlphaMetrix pool participant funds to which it had no legitimate interest or entitlement,” the CFTC said.

The CFTC said an injunction is needed to prevent future violations of the Commodity Exchange Act by AlphaMetrix, which the regulator said operated about 90 commodity pools and had about $700 million of assets under management as of Aug. 31.

“Unless immediately restrained and enjoined by this court, AlphaMetrix is likely to continue engaging in the acts and practices alleged in this complaint, and additional pool participant funds may be misappropriated or otherwise dissipated,” the CFTC said.

Monday’s complaint seeks civil fines, restitution, an accounting of assets and liabilities, and other remedies.

AlphaMetrix did not immediately respond to requests for comment.

In a letter to customers last month, AlphaMetrix Chief Executive Aleks Kins said the company was facing “significant cash flow issues.”

Then on Oct. 30, AlphaMetrix said it would cease trading in its commodity pool and enter an orderly liquidation.

Also in October, the National Futures Association ordered AlphaMetrix to repay about $600,000 in fee rebates to pool participants by Nov. 1 as part of a member responsibility action, among its most serious enforcement actions.

The case is U.S. Commodity Futures Trading Commission v. AlphaMetrix LLC, U.S. District Court, Northern District of Illinois, No. 13-07896.

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