LJM Funds Management Founder’s Statement in response to SEC and CFTC Actions
(STL.News) We published two announcements yesterday regarding LJM Fund Management. Article titles and links are listed below:
The following statement was provided to us:
Anthony “Tony” Caine, Founder and Principal of LJM Funds Management, Ltd. (“LJM”), today issued the following statement in response to enforcement actions brought against LJM and its principals by the Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”) in the U.S. District Court for the Northern District of Illinois:
“We categorically deny all of the SEC’s and CFTC’s assertions, have summarily rejected their respective settlement offers, and will vigorously defend ourselves. We will demonstrate that the risk of loss was fully disclosed, LJM did not deviate from historical portfolio and risk management practices, and the losses sustained on February 5-6, 2018, occurred as a result of events outside of LJM’s control.
“The suggestion that LJM committed fraud has no factual basis and is undermined by the fact that I personally lost over $100 million on February 5-6, 2018, and LJM portfolio managers invested more than $500,000 new capital on February 1, 2018, in the same funds as LJM investors.
“The event is known as Volmageddon that caused the collapse of multiple investment firms involved a single-day increase in the VIX Index of 20.01 points or 115%, more than double the previous largest single-day percentage move. According to an analysis by Integritas Financial Consulting, this increase was a 13.7 standard deviation event or the equivalent to the probability of the same person being hit by lightning 1,000 times.
“During the SEC and CFTC’s three-year investigation that included a dozen full-day interviews of LJM officers and employees, neither regulator ever asked the most important question: What caused the losses? LJM presented extensive and compelling data indicating that VIX manipulation was the primary cause of the losses, further exacerbated by FCM system failures and improper FCM forced position liquidation. LJM is pursuing financial recovery for its investors in lawsuits pending in federal court in Chicago and New York.
For twenty years, LJM compiled an impressive track record of annualized returns ranging from 9% to 18% for its three core funds. Before Volmageddon, LJM successfully managed multiple periods of extraordinary market volatility, including the 2008 financial crisis.
“It is highly ironic that the SEC and CFTC are now filing claims against LJM, which was harmed by their failure to oversee markets and prevent manipulation in VIX and SPX options markets.”
“We will vigorously defend these false claims while continuing to aggressively pursue actions to seek financial recourse for LJM investors.”
News provided by: Kevin M. FitzGerald, Vice President – Gasthalter & Co.