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Opalesque Futures Intelligence

News: Morgan Stanley reduces equity exposure, looks towards managed futures; Managed futures experiences 12th month of growth; Forex firm fined by CFTC.

Wednesday, November 16, 2011

Morgan Stanley backing off equities, moving to managed futures

Noting one of the more significant global economic shifts in market, Morgan Stanley’s Global Investment Committee recommended a decrease in allocation towards equities and an increase in managed futures allocation, among other recommendations.

“The risk of recession in the US and the rest of the developed world has grown significantly in recent weeks, so we are adopting an overweight position in safe havens and an underweight position in risk assets,” the Tactical Asset Allocation Change report noted.  “This is the most significant change to our tactical asset allocation in more than two years, as we are decisively moving to bearish from bullish.”

Noting a growing worldwide debt problem that politicians continue to avoid, the report said: “The primary source of the recent financial market distress-with, we think, more to come-has been a combination of policy inaction and ineptness in the US and Europe.”

Such a realistic outlook has resulted in a move towards market neutral investments.  “As an asset class, managed futures have low historical correlations to other asset classes, providing a considerable degree of portfolio diversification,” the report noted.  “We believe good risk management begins with portfolio diversification, but it doesn’t have to end there. Because managed futures have historically performed well during periods of adverse equity markets, we are adopting a tactical overweight allocation.”

“This is the most significant change to our tactical asset allocation in more than two years, as we are decisively moving to bearish from bullish,” the report noted.
To download the full report follow this link:

Managed Futures Assets Grow For 12th Month in a Row

Managed futures experienced its 12th consecutive month of asset growth, according to data provider Eurekahedge.
Following a similar pattern to the one seen in August, most strategies were loss-making in September with the exception of CTA/managed futures funds, which were flat to slightly positive. The Eurekahedge CTA/Managed Futures Hedge Fund Index was up 0.13%4 during the month, with short-term systematic traders leading the gains. Managers trading currencies, options and futures posted the highest profits while returns from commodity investing hedge funds were mixed.  (Index performance can vary from individual manager performance due to differing voluntary reporting methods and the impact diversification can have on performance.)

For additional information visit:


Forex Trading Firm Fined $14.2 Million by CFTC
October 3, 2011 - The U.S. Commodity Futures Trading Commission (CFTC) fined New York-based Forex Capital Markets LLC (FXCM) for failure to supervise its employees.  The CFTC order states that FXCM prevented its customers from receiving the benefit of price movements in customers’ favor, but allowed its customers to suffer detrimental price movements. The CFTC order finds that had FXCM diligently supervised its personnel, FXCM would have discovered these problems with its trade integrity and would have had the opportunity to correct them before its customers were deprived of, and FXCM benefitted by, approximately $8,261,937.   The CFTC order requires FXCM to pay a $6 million civil monetary penalty and restitution of $8,261,937 to its customers and former customers.  For additional information click here:


NFA revokes registration of commodity trading advisor, William S. Scott

October 12, Chicago - National Futures Association (NFA) has revoked the registration of William S. Scott of Miami, Florida. Scott is a Commodity Trading Advisor and is the sole principal and associated person (AP).

A designated Subcommittee of NFA's Membership Committee issued the Final Order revoking registration because Scott is subject to an outstanding order from the Florida Supreme Court suspending his license to practice law in the state. Additionally, the Subcommittee found that Scott engaged in conduct, as described by the Florida Supreme Court's decision and corroborated at the hearing before the Subcommittee, that demonstrates a lack of honesty, an inability to comply with regulatory requirements and a potential for similar behavior in the futures industry. The Subcommittee also found that Scott has not presented evidence that his continued registration would not pose a substantial risk to the public.
For additional details click here:


CFTC Obtains Default Judgment against North Carolina Foreign Currency Firm Barki LLC in a $38 Million Ponzi Scheme
Consent Order Requires Relief Defendant Rhonda Kramer to Disgorge Assets

October 11, 2011 Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that the U.S. District Court for the Western District of North Carolina entered an order of default judgment and permanent injunction against Barki, LLC of Mint Hill, N.C.
The order, entered on September 30, 2011, stems from a CFTC enforcement action filed on March 17, 2009 that charged Barki and Bruce C. Kramer (Kramer) with fraudulent solicitation and misappropriation in a $38 million leveraged foreign currency (forex) Ponzi scheme perpetrated by Kramer (see CFTC New Release 5635-09, March 18, 2009).  Click here for a link:


Federal Court Orders Texas Resident Ray M. White and CRW Management LP to Pay More than $19 Million for Defrauding Customers and Misappropriating Millions of Dollars in Forex Fraud

Ray White pleaded guilty to related federal charges and was sentenced to 10 years in federal prison.

October 11, 2011 Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) obtained federal court consent orders resolving its remaining claims against defendants Ray M. White and CRW Management LP (CRW) and relief defendants Christopher R. White and Hurricane Motorsports, LLC, all of Mansfield, Texas.
The claims arose from a CFTC complaint filed on March 4, 2009, in the U.S. District Court for the Northern District of Texas, charging the defendants with operating a multi-million dollar off-exchange foreign currency Ponzi scheme (see CFTC Press Release 5626-09, March 5, 2009). The relief defendants were named in the lawsuit because they received funds as a result of the defendants’ fraudulent conduct and had no legitimate entitlement to those funds.  For additional details click here:

This article was published in Opalesque Futures Intelligence.
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