Chicago-based investment firms AlphaMetrix, LLC and AlphaMetrix Group, LLC have been penalized by the U.S. Commodity Futures Trading Commission (CFTC) for fraudulent activity involving customer rebates. On December 16, 2014, Judge Joan H. Lefkow of the U.S. District Court for the Northern District of Illinois entered a Consent Order permanently barring the companies from further violations of anti-fraud provisions of the Commodity Exchange Act.
The CFTC charged AlphaMetrix with failing to distribute approximately $2.8 million in rebates owed to commodity pool participants. Instead of paying the rebates, AlphaMetrix allegedly invested the funds within its own pools and then transferred them to its parent company, AlphaMetrix Group, which had no legitimate claim to the money. Despite this, AlphaMetrix issued account statements to participants falsely indicating the rebates had been reinvested.
As a result of the order, AlphaMetrix is required to pay $2.8 million in restitution to affected customers and a $2.8 million civil monetary penalty. AlphaMetrix Group must also disgorge $2.8 million. The total financial impact of the penalties and restitution amounts to $8.4 million.
A related civil action, filed by court-appointed receiver Deborah Thorne, is currently pending in the U.S. District Court for the Northern District of Illinois. This lawsuit seeks to recover funds from former officers of both AlphaMetrix, LLC and AlphaMetrix Group, LLC. The case number is 14-2472.
The CFTC advises that victims of fraud may not fully recover their losses, as wrongdoers may lack sufficient assets to cover restitution. The agency states it remains committed to protecting customers and holding accountable those who engage in fraudulent practices. The case was led by CFTC staff members Stephanie Reinhart, David Terrell, Joseph Patrick, Scott Williamson, and Rosemary Hollinger, with assistance from the Division of Swaps and Intermediary Oversight and the National Futures Association.
This enforcement action was announced on December 18, 2014, from Washington, D.C.
Source: CFTC.gov
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