Portfolio managers shouldn’t keep the best trades for themselves

Nope, portfolio managers shouldn't keep the best trades for themselves (at the expense of other investors). BlueCrest moved its best traders into a management-owned fund, and used AI to replicate their trades in the main fund. Unfortunately, the replication was poor, and investors redeemed and sued when the intel of the new approach came out. The SEC is now forcing BlueCrest to compensate investors $130m for the underperformance, with a $37m penalty on top.

Nope, portfolio managers shouldn’t keep the best trades for themselves (at the expense of other investors).
BlueCrest moved its best traders into a management-owned fund, and used AI to replicate their trades in the main fund. Unfortunately, the replication was poor, and investors redeemed and sued when the intel of the new approach came out.

The SEC is now forcing BlueCrest to compensate investors $130m for the underperformance, with a $37m penalty on top.

Credits to Dave Michaels at the WSJ

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