The train has indeed hit the buffers. FX Concepts has now taken the decision to close its North American, British and Singapore operations, representing the wrapping up of the entirety of the firm’s business, after thirty two years in existence, during which it spent a large proportion of its operational time enjoying the prestigious position as America’s largest FX hedge fund.
Delayed Media Reaction
On September 30, Forex Magnates exclusively reported breaking news that the company’s final client, the San Francisco Employees’ Retirement System (SFERS), had issued the firm with its intent to withdraw its funds, and that FX Concepts had begun winding back positions that same day, marking the end of an era within the FX industry as a whole.
It wasn’t until a week and a half later that that this became the subject of mainstream news across the United States, as the company announced yesterday via various financial news channels that its investment management division will be wound down.
FX Concepts Vice Chairman Jonathan Clark explained to Reuters yesterday that the company does not have enough assets in order to sustain the business, which further confirms Forex Magnates’ research made in September on this matter, which was reported some 10 days prior to the mainstream media.
During the conversation between Forex Magnates and FX Concepts on September 30 regarding the outflow of the company’s last institutional mandate in September, FX Concepts Chief Strategist Bob Savage explained that due to client confidentiality, he was not at liberty to discuss the actual client itself, but when asked in the same conversation if it was SFERS, as confirmed at the time to Forex Magnates by industry sources, Mr. Savage explained that Forex Magnates was “on the right lines, but I will be able to speak more freely in a few weeks’ time”. Consequently, further sources substantiated the same day that it was indeed SFERS and that this was the final client on the company’s books.
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Attempts by Forex Magnates to contact key personnel at the company today were met with unanswered emails and evasive responses to telephone calls.
From $14 Billion To Closure Within Six Years
The company entered difficult times during February this year, the same month as aggregation provider MarketFactory signed up the company for its FX aggregation feed, as two of the firm’s largest clients, the Pennsylvania Public School Employees’ Retirement System and Bayerische Versorgungskammer pension fund, both terminated their relationship with FX Concepts according to media reports at the time.
Mr. Savage said the firm’s assets under management had recently dropped to $621 million from a high of $14 billion in 2007, and with the termination of relationship between FX Concepts and SFERS, a source explained to Forex Magnates that he was “not sure how much of its own money the company has left to manage. I don’t think there is much money left” during a conversation with Forex Magnates last week.
One of the more unfortunate upshots of this is the necessity to lay of further employees. The company had already experienced an exodus of staff, with the number of employees standing at 44 in February, compared to 60 just two years earlier, and is now expected to reduce to just skeleton staff consisting of key personnel.
Mr. Savage explained to Reuters that sustained performance decreases in key funds had been the main contributor to the firm’s current situation, and that asset liquidation in order to stay afloat had been investigated including the possibility of closing its flagship GCP fund, which has lost 10 percent so far this year. A further example of decline include the company’s Multi-Strategy Fund which has lost 8.9 percent.
As far as the $25 million New York real estate purchased by John Taylor, the company’s Chairman with funding in the form of a loan from the company is concerned, the property, which was purchased for $4.5 million above its asking price, remains on the market. Proof indeed, that even giants can sometimes be humbled.