AlphaMetrix Closes Funds Valued at $700 Million in August

AlphaMetrix Group LLC, which had about $700 million of client assets as recently as Aug. 31, will begin closing its investment pools starting tomorrow, three weeks after saying it was running short of cash.

The Chicago-based company’s commodity pool operator, which distributes client funds to professional money managers, will start an “orderly liquidation,” AlphaMetrix said today in an e-mailed statement.

“In light of recent redemption requests, AlphaMetrix has determined that its sponsored funds will no longer be able to effectively trade the investment strategy employed by each trading adviser,” the company said in the statement. About 90 percent of proceeds will be given to investors around Nov. 21, with the balance distributing after a final audit.

AlphaMetrix told clients earlier this month that it was experiencing “significant cash flow issues” and fired Chief Financial Officer George Brown, the brother-in-law of Chief Executive Officer Aleks Kins. The firm, which also runs conferences featuring high-profile speakers such as former U.K. Prime Minister Tony Blair, had marketed itself as a haven for investors from fraudsters such as Bernard Madoff.

The National Futures Association, a self-regulatory group for the U.S. derivatives industry, has set a Nov. 1 deadline for AlphaMetrix to repay about $600,000 to the professional money managers who invest the funds in the AlphaMetrix pools.

Higher Profile

AlphaMetrix increased its public profile last year by winning a contract with NFA and Chicago-based CME Group Inc., which runs the world’s largest futures exchange, to shore up standards for monitoring client accounts. That followed industry failures such as the collapse of MF Global Holdings Ltd. in 2011 and Peregrine Financial Group Inc. in 2012. In both cases, customer money went missing.

Kins told regulators on April 30 that AlphaMetrix connected to more than 300 futures brokerages and banks and 4,000 trading managers, according to the transcript of a meeting with the U.S. Commodity Futures Trading Commission.

Brown joined AlphaMetrix in March 2008. Before that he was a consultant to Nature’s Best, which sells dietary supplements, and the CFO of cracker maker Old London Foods Inc., according to a government filing.

The AlphaMetrix conference business hired Blair and Gordon Brown, another former U.K. prime minister, for events this year in Monaco and Miami Beach, Florida. Blair earned $300,000 plus expenses for speaking at the Florida event in January, Bloomberg Markets magazine reported earlier this year, citing a person familiar with the matter. Blair’s spokeswoman said at the time that the fee was lower than reported.

AlphaMetrix also hosted a performance last year by CeeLo Green, a singer from American soul group Gnarls Barkley and a judge on TV singing competition “The Voice.”

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