(Reuters) - 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 November 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 violated 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 failed to do so, the order said, AlphaMetrix would be barred from placing trades for any of its 90 pools except for liquidation of existing positions.
“AlphaMetrix has and will continue to cooperate with NFA,” an AlphaMetrix representative said.
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 customer protections.
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 continued operations.”
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 NFA and CME did not immediately respond to requests for comment.
Reporting by Tom Polansek and Ann Saphir; Editing by Bob Burgdorfer and Stephen Coates