The National Futures Association ordered AlphaMetrix Group to pay $600,000 of management and incentive fees owed to some of the 90 managed futures funds, commodity trading advisers and hedge funds on its managed account platform by Nov. 1.
AlphaMetrix also is forbidden from soliciting or accepting any new assets from investors or fund managers until the fund managers are paid in full.
The NFA, the managed futures industry's self-regulating body, issued the order on Monday, according to a copy of the member responsibility action case document, available on the association's website.
The NFA said it recently examined the books and records of AlphaMetrix and found that the firm had $700 million under management as of Aug. 31. As recently as midyear 2012, AlphaMetrix had about $7 billion under management on its investment platform.
The NFA document said the association took the action “deemed necessary to protect AlphaMetrix's pool participants because AlphaMetrix has withdrawn management and incentive fees from various pools that were earned or owed to third-party money managers.” AlphaMetrix also did not reinvest about $600,000 of fee rebates, the document said.
The withdrawal and non-investment of these fees constitute a direct and indirect loan, the NFA said. If AlphaMetrix does not repay the loans by the Nov. 1 deadline, the firm will be prohibited from trading in any pools, except to liquidate exiting positions, and from disbursing or transferring assets from client and fund manager accounts without NFA approval.
AlphaMetrix Group has “recently encountered significant cash flow issues” and has been unable to provide cash to its commodity pool operator that manages the investment platform, according to an Oct. 10 letter to investors from Aleks Kins, AlphaMetrix Group CEO and president. Pensions & Investments obtained a copy of Mr. Kins' letter.
AlphaMetrix has and will continue to cooperate with NFA,” according to a company statement provided by Conor Shea, a company spokesman.
Mr. Kins was not available for an interview, Mr. Shea said.