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Screenshot of a breaking news alert e-mail from Q2 2017
The company is bankrupt, the CEO is gone, look for him in the US…
Do you remember these words?
This was the direct message the management of Blackfield Capital, a Moscow-based algorithmic trading company, issued to clients of the company in October 2014, as it became clear that the money has disappeared together with the company’s chief executive. The message has become one of the most cynical and honest admissions in the online trading world.
The saga came to its regulatory conclusion today, as the Bank of Russia finally took steps to banish Blackfield Capital from the Russian securities market. In a special announcement, the central bank said it annulled the license of Blackfield Capital as a securities dealer and as a securities manager.
The bank said Blackfield Capital had repeatedly breached Russia’s securities laws in the course of one year: a sufficient reason to annul its license.
At this point, unfortunately, the move by Russia’s regulators is rather formal and would hardly bring any relief to clients of Blackfield Capital who have lost millions of dollars as the company’s chief executive Kim Karapetyan fled and left the company penniless.
While “in operation”, the company promised its clients returns of up to 60% thanks to what the management dubbed super-successful algorithmic trading strategies, based on scientific methods. Karapetyan claimed he was not only a scientist but also a former portfolio manager at Morgan Stanley. A report by the WSJ several months after the demise of the company showed there was never such an employee on record at Morgan Stanley.
Before leaving the company without any prior notice, Karapetyan led lavish life in Russia and the United States, with acquiring luxurious cars and property being constant part of his everyday duties.
The website of Blackfield Capital, the same one that had the famous direct message on it, went irresponsive about a week ago. This is how the story ends. The rest is up to the prosecutors and the police.
To view Bank of Russia’s original announcement on Blackfield Capital’s license withdrawal, click here.