Platt’s BlueCrest Agrees to Pay Out $101 Million to Investors

Michael Platt’s investment firm BlueCrest Capital Management will pay out $101 million to investors after U.K. regulators said it failed to manage conflicts of interest over an internal investment fund.

BlueCrest and the U.K.’s Financial Conduct Authority have been grappling over the scope of the compensation demand, with the pair previously due to go before the UK’s highest court on the matter next month. The FCA had originally sought more than $700 million in redress.

“This redress scheme brings a positive end to a long-running case,” Therese Chambers, the FCA’s joint head of enforcement, said in a statement. “BlueCrest put its own interest ahead of the external fund and provided a substandard service, which meant that investors lost out.”

In its provisional report, the FCA argued that BlueCrest’s failure to manage the conflict meant that investors paid “excessive” management and performance fees. Disclosures to investors were insufficient and, at times, misleading, the FCA said.

In December 2021, the FCA outlined how BlueCrest moved its traders from the main client fund to the internal one. They were in part replaced with an under-performing algorithm, which generated significantly less profit and more volatility. The FCA said investors ought to get back a proportion of management and performance fees.

“Given the significant amount of time that has elapsed since the events at issue and in order to draw a line under the matter, BlueCrest has agreed a settlement with the FCA,” the company said in a statement. “BlueCrest does not accept the findings set out in the final notice issued by the FCA.”

In the U.S., BlueCrest agreed to pay $170 million to ex-clients — one of the largest penalties the Securities and Exchange Commission ever levied against a hedge fund.

Top photo: Canary Wharf financial, business and shopping district in London.