On November 4, 2013, the U.S. Commodity Futures Trading Commission (CFTC) filed a fraud lawsuit against Chicago-based AlphaMetrix, LLC. AlphaMetrix is registered with the CFTC and with the National Futures Association as a commodity pool operator, commodity trading advisor, swap firm, and forex firm.
The complaint, filed in the U.S. District Court for the Northern District of Illinois, alleges that AlphaMetrix misappropriated funds from commodity pools the firm operated and misled some of its pool participants. A federal district judge issued a restraining order on AlphaMetrix’s assets soon after the complaint was filed.
AlphaMetrix appears to have told some of its clients that it would reinvest their funds for them, but instead transferred approximately $2.8 million of those funds to its parent company, AlphaMetrix Group, LLC. The parent company had no legitimate entitlement to the $2.8 million it received between January 1 and October 31, 2013.
The firm issued statements to its clients that reflected increases in their net asset values as if the funds had been invested properly. If the CFTC’s allegations prove to be true, the transfers of funds to the parent company and the misreporting of customer NAVs would constitute violations of the Commodity Exchange Act.
Earlier in October, the president and CEO of AlphaMetrix Group hinted at the problem in a letter in which he admitted that the firm was facing “significant cash flow issues” and was delaying fee rebates owed to some of its clients.
Blau & Malmfeldt is a law firm that represents investors across the United States in securities, commodity futures, partnership and shareholder rights disputes. Contact us at 312-443-1600 to learn about the services we offer.