Capital Blu is trouble. After reporting a fantastic 57% in one month earlier in the year, things gone in the opposite direction. Some managers have been allegedly removed and a maximum drawdown of 15% has been imposed.
See letter. A few person on this blog had questioned the auditors being used.
Capital Blu Investors Suffer 90% Losses.
Dear Capital Blu Clients,
In Mid-July we commenced trading at Saxo Bank and began running parallel programs with PFG. While both programs were utilizing the same exact strategy and held essentially the same positions; our trading team began noticing significant differences in the platforms. Some of the key differences were:
- Quoted Rates with inflated spreads on both platforms.
- PFG required margin on net position; Saxo Bank required margin on gross positions.
- PFG portfolio could be managed through a single master account; Saxo Bank’s portfolio had to be managed by each individual account.
What appeared to be manageable challenges on both platforms unfortunately were exaggerated on August 8th when the market made a dramatic trend reversal.
On the Saxo platform margin calculations which were averaging around 20% rose to over 100+% (extremely abnormal). Our trading team immediately began rebalancing the portfolio to reduce margin, however, due our inability to rebalance the entire group of managed accounts at one time we had a few clients get stopped out resulting in catastrophic losses. The accounts that were still below the 150% threshold had to be managed independently which ultimately compromised the trading strategy. Over the course of the next several weeks our trading team worked to rebalance each individual portfolio, however, since we were forced to unload positions based on necessity we were left with very few favorable positions and ultimately saw the entire managed account portfolio stopped out for approximately an 80-90% lose in every account.
We truly understand the frustration of each and every customer and wish there were something more that we could have done prior. In hindsight there were several actions we would do differently; however, this isn’t a time for what ifs as you deserve a plan for how we are going to move forward.
So the question many of you are asking of Capital Blu is where we go from here. Well first and foremost, you have our commitment that we will do everything commercially, legally and ethically possible to rebuild each and every client’s account.
Internally, we have taken the following actions:
- Blayne Davis, Director of Portfolio Management is no longer a member of the Capital Blu.
- Implementation of formal risk management procedures to ensure a client’s max drawdown is 15% regardless of trader, platform, strategy, etc.
- Indefinite suspension of the BluFX Options Benchmark Managed Account Program.
While we understand that many of you are looking for us to simply cut a check to reimburse the losses, we have been advised by our legal team that we cannot commercially offer this type of reparation. As per the program disclosure, Capital Blu Management will honor the high watermark of the August 1, 2008 balance for all clients in the BluFX Options Program. In essence, we will rebuild each and every account free of any commissions or performance fees until we have brought the account balance back to the August 1, 2008 balance.
Joe Mills | Director of Sales & Marketing
Capital Blu Management LLC
Filed under: UFOs | Tagged: Blayne Davis, Capital Blu, Damien Bromfield, Donovan Davis, Forex, Investments | 26 Comments »