BlueCrest Capital Management Agrees to Pay $170 Million to the SEC

Posted on December 9th, 2020 at 4:19 PM
BlueCrest Capital Management Agrees to Pay $170 Million to the SEC

From the Desk of Jim Eccleston at Eccleston Law LLC:

BlueCrest Capital Management has agreed to pay $170 million to settle allegations from the U.S. Securities and Exchange Commission (“SEC”) that the firm misled investors. The SEC alleged that BlueCrest, based in the United Kingdom, misled investors about the use of algorithms instead of live traders in the firm’s flagship fund, according to an article from Law360.

According to the SEC, BlueCrest transferred its best-performing traders from the firm’s flagship fund, BlueCrest Capital International (“BCI”), to a proprietary fund, and then used an algorithm to make trading decisions in BCI. The SEC alleged that this transition to the use of an algorithm resulted in worse returns for investors. According to the SEC, the BCI’s use of an algorithm resulted in the fund underperforming its target by an average of $25 million per month.

The high-performing traders that were removed from BCI were transferred to BSMA, a BlueCrest fund that was reserved for BlueCrest personnel. The SEC alleged that BlueCrest made misstatements to conceal a number of things, including the existence of BSMA, the transfer of traders from BCI to BSMA, the use of algorithms in BCI, and the conflict of interest created by the two funds.

Under the terms of the settlement, BlueCrest will receive a censure, pay a $37.3 million penalty and $132.7 in disgorgement.


Tags: eccleston, elo, blue crest capital management, sec, payout

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