The National Futures Association (NFA) on Thursday filed a Member Responsibility Action (MRA) against Last Atlantis Capital Management LLC (LACM). LACM is a Virgin Islands based Commodity Trading Advisor/ Commodity Pool Operator, which also has offices in St. Charles IL, where the CTA/CPO previously was registered as Sjo Inc.
The MRA prohibits LACM from soliciting or accepting any customer or pool participants’ funds for Last Atlantis Partners LLC, LACM Proprietary Options, Share Class O. Additionally, the MRA prohibits LACM from disbursing or transferring any funds of customers or participants in Last Atlantis Partners LLC, LACM Proprietary Options, Share Class O without prior NFA approval and from placing trades on behalf of Last Atlantis Partners LLC, LACM Proprietary Options, Share Class O, except to liquidate existing positions.
The problem according to the MRA, is that statements from the broker dealer carrying LACM’s Share Class O account shows a loss of $3.5 million in 2007 while the annual pool financial statement shows a gain of $526,385 for 2007. LACM indicated to the NFA that the discrepancy is partially due to a receivable to be paid to the account through introducing broker Petra Trading Group LLC and is based on payment for order flow funds owed the account. These funds are to be paid to Petra by Interactive Brokers (IB) and eventually paid to Share Class O.
One additional complication though is that IB, according to the MRA, filed an arbitration claim in August 2007 at the Financial Industry Regulatory Authority (FINRA) against LACM, Petra and other individuals claiming Petra had entered into wash trades for the sole purpose of generating payment for order flow. IB alleges that it paid over $9.7 million in such rebates over several years and states that it ceased executing trades for Petra in May of 2007. Petra has filed a counterclaim arguing that IB owes it approximately $5.1 million for trades that Petra directed to IB, many of which came from LACM.
NFA claims the action is necessary because LACM has provided false and misleading information to participants in Last Atlantis Partners LLC, LACM Proprietary Options, Share Class O and to the NFA. The NFA added that LACM “acted in a manner contrary to the interests of their customers by making a loan from assets of Last Atlantis Partners LLC, LACM Proprietary Options, Share Class O to a related entity without timely disclosing this relationship to the participants.”
The MRA will be in affect until LACM is in compliance with NFA requirements. Officials of LACM did not return our calls as of this posting.
Tags: Last Atlantis Capital Management LLC, Member Responsibility Action
