By Gertrude Chavez-Dreyfuss
NEW YORK Mon Nov 25, 2013 5:03pm EST
NEW YORK Nov 25 (Reuters) - FX Concepts, once the largest currency hedge fund in the world, has less than $2 million in assets now and $79 million in liabilities, according to the latest court filings on Monday.
The fund filed for bankruptcy protection more than a month ago as its assets dwindled due to market losses and redemptions from major clients.
At its peak in 2007, the $14 billion that FX Concepts had in assets under management made it the largest currency hedge fund in the world.
The latest court filings showed FX Concepts has $1.62 million in assets and about $79.2 million in liabilities. The biggest part of those assets is a $1.61 million loan note from FX Concepts Chairman and Chief Investment Officer John Taylor.
The filings on Monday also stated FX Concepts' income for the past three years were $173,651.68 in 2011, $1.13 million in 2012, and $35,785.47 from January to September 30, 2013.
The fund's biggest debt is a $34 million unsecured note to Asset Management Finance (AMF), which is majority-owned by Credit Suisse and provides flexible capital to investment firms.
Court documents showed that AMF provided $40 million in financing to FX Concepts in 2006 and 2010 through two revenue-sharing agreements. In December 2012, as returns dwindled in the FX market, Taylor renegotiated the financing package. AMF then agreed to defer eight quarterly revenue-sharing payments and in return Taylor personally guaranteed those obligations.
At the beginning of the year, the company paid $749,309 to company insiders, described as "shareholder distribution."
The biggest payment was made to Taylor and his trust, totalling $376,433. Taylor and his trust own roughly 41 percent of the company.
FX Concepts suffered from poor returns due to the weak performance of its systematic trading business. About 90 percent of the fund's trading is done through the systematic approach, which involves the use of computer models in trading.
This approach has not worked in 2013. As returns dwindled, investors withdrew. The final blow came in early September when the San Francisco Employee Retirement System gave notice that it was redeeming its investment in full. That investment accounted for 66 percent of FX Concepts' total assets under management at that point. (Editing by Kenneth Barry)
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