As a public deadline with the National Futures Association (NFA) approaches that could essentially end the firm’s business, a source inside AlphaMetrix expressed optimism the January, 2014 conference in Miami Beach will take place. Further, this source considered it likely the firm will pay all outstanding fees owed to managed futures CTAs before the November 1 deadline imposed by an NFA enforcement action. A formal announcement is expected within days.
If AlphaMetrix does not pay fees to managed futures commodity trading advisors (CTAs) the NFA would prohibit the firm from placing trades for pools it operates, except for liquidating trades, and further would ban it from disbursing or transferring any funds from any customer or pool account without NFA prior approval. With this crippling event as a backdrop, sources indicate that firm CEO and founder Aleks Kins has been engaged in a juggling act of negotiations with multiple parties, having the goal to emerge from the troubles a different but nonetheless viable entity. Sources say the structure of the debt load and negotiations to keep creditors comfortable with collateral are key issues.
At the upcoming 2014 Miami Beach conference attendees might expect some of the lavish entertainment to be toned down; as well, speculation is the list of complementary accommodations for many institutional allocators to attend the event might not be as extensive, but the key concept for speed dating between allocators and managed futures CTAs and hedge funds is expected to remain.
Speculation is the firm would likely reduce head count and could spin off some of its divisions, including the fund administration business, which currently has several buyers interested but many of whom are waiting for an opportunity to obtain the most advantageous pricing. As AlphaMetrix top executives continue to engage in a juggling act, potential buyers and financing sources appear to be using the November 1 deadline to their negotiating advantage. Results of the negotiations are in no way certain. The worst case is no financing and then bankruptcy, leaving CTAs to fight for their fees among the scraps left from a time consuming and financially draining bankruptcy process that was the case with MF Global and PFG bankruptcies. Sources, however, now indicate this is a lower probability than it once was.
Regulators continue to be vigilant in regards to customer funds, wary of the potential damage another MF Global or PFG scandal could cause. If AlphaMetrix customer funds did end up missing, the criminal and legal outcome would likely be significantly harsher for Mr. Kins and his executive staff than was the case with MF Global, a separate source indicates.
DISCLOSURE: These are the opinions of the author and may not have considered all risk factors. Nothing on this web site should be construed as an individual recommendation, talk to your independent advisor. The author and Opalesque may have relationships with those people they cover in the publication. Mr. Melin provides a full disclosure of his business relationships to regulators and certain eligible participants who engage him in consulting projects. Managed futures investing involves risk and there are no guarantees of safety or future performance being implied. Managed futures can be a risky investment. This web site and its content is subject to the terms of the web site. Risk Disclosure and terms of web site are available here: http://www.uncorrelatedinvestments.com/templates/Disclaimer.html Performance information received on this site is provided by third parties and deemed reliable but there is no guarantee relative to same. Performance reporting sources and quality assurance techniques may include, but are not limited to: disclosure document, CTA self reporting, brokerage firm reporting, consultant reporting, spot checking other reporting databases; nonetheless no guarantee of accuracy or implication performance verification or auditing is being made by the publishers. The CTA Database is a project separately managed from www.uncorrelatedinvestments.com.