BlueCrest Capital Management Limited agreed to pay $170 million to settle a complaint filed by the Securities and Exchange Commission (SEC) over its alleged inadequate disclosures.
According to the SEC, the charges against the UK-based investment adviser were connected to the transfer of its top traders from its flagship client fund, BlueCrest Capital International (BCI) to a proprietary fund, BSMA Limited. The investment adviser allegedly replaced the traders with an underperforming algorithm,
BlueCrest willfully violated the antifraud provisions of the Securities Act, and the Investment Advisers Act as well as the compliance rule of the Advisers Act.
The firm settled with the Commission without admitting or denying the charges against it.
The $170 million settlement included disgorgement and prejudgment interest of $132,714,506 and a penalty of $37,285,494. BlueCrest agreed to a cease-and-desist order imposing a censure. The Commission will distribute the $170 million to investors harmed by BlueCrest.
Allegations against BlueCrest
In its Order, the SEC found that BlueCrest created BSMA to trade the personal capital of its personnel using primary trading strategies that overlapped with BCI’s. The investment advisers’ governing body owns a 93% interest in BSMA, which reached as much as $1.79 billion compared to its approximately $619 million ownership interest million in BCI.
