A hedge fund tied to a British billionaire who was caught on camera last year bragging about his wealth has been fined $170 million for misleading to investors, the Daily Mail reports.
BlueCrest Capital Management was accused by the Securities and Exchange Commission of being negligent in using a separate fund to invest its own traders' money rather than its main fund which relied on an underperforming algorithm.
The algorithm, according to the SEC, underperformed by at least $25 million a month, while the company's own traders profited off a separate pot of money.
BlueCrest was co-founded by hedge-fund manager Michael Platt, 52, a billionaire worth an estimated $8 billion who was caught on camera last year boasting to a New York City taxi driver that he was 'the highest-earning person in the world of finance'.
The company, where Platt still serves as a senior executive, has neither admitted or denied the allegations stemming from October 2011 to June 2015.
According to the Securities and Exchange Commission, BlueCrest made 'material misstatements, and misleading omissions' about how it made its calculations which it's believed occurred when the company's top talent started work on a new proprietary fund used to manage employee capital in 2011.
As a result, the company's flagship fund where investors' money languished, was left to an underforming algorithm that failed to hit its target profits by $25 million a month on average, according to the SEC.
The algorithm failed to make sudden market moves, and did not replicate human traders' decisions because it followed their moves one day later, the SEC said.
Clients were alerted to by a due-diligence consultant alerted clients in 2014. In 2015, the firm made the decision to transition to a private investment partnership and stopped managing external money.
'BlueCrest repeatedly failed to act in the best interests of its investors,' the SEC's Stephanie Avakian said in a statement. 'Including by not disclosing that it was transferring its highest-performing traders to a fund that benefited its own personnel to the detriment of its fund investors.'
BlueCrest is to pay $132 million to investors along with a $37 million civil penalty.
However, it has neither admitted nor denied the SEC's findings.
In a statement to the Wall Street Journal, BlueCrest said it was 'pleased' to have resolved the issue 'which primarily involved disclosures that were made more than five years ago'. The company said it does not relate to the way it conducts its current business operations.
BlueCrest is no longer registered as a financial adviser in the United States.
Platt received attention last winter after a cab ride in which he bragged about his enormous wealth as one of the highest earners in the world of finance.
In 2018, he managed to earn an estimated $1.2 billion according to Forbes while in 2019 it's estimated he earned $2 billion.
Forbes currently estimate him to have a net worth of $8 billion.
