(March 20, 2012) -- FX Concepts, the world's largest currency hedge fund, is continuing to face a mass exodus of its employees -- the latest being the departure of its chief financial officer Anthony Sacco.
"I'm no longer an employee. I'm now an outside consultant for the next few months, helping with the transition with my departure," Sacco, who will be starting his own consulting firm, tells aiCIO.
aiCIO reported that FX Concepts lost three employees. The firm's former head of investment research Jim Conklin left to go to Greenwich, Connecticut-based QFS Asset Management as director of research. Tim O’Grady left FX Concepts in September after two years at the firm as managing director of fixed-income. Brett Holleman -- previously managing director and portfolio manager with the currency-trading firm -- was also terminated.
The exodus of senior employees coincides with a sharp decline of the firm's assets under management. The firm has lost greater than 50% of its asset base over the last year, cutting severely into employee compensation along with company morale, sources say.
"It's demoralizing for everyone who works there," says one former employee at FX Concepts who refused to be identified, indicating that a further exodus of senior employees would not be at all surprising.
Michael Zentz, currently a student at New York University Law School and previously a portfolio manager at FX Concepts for 10 years, echos the sentiment of volatility pummeling not only currency-trading strategies but also investing talent at the fund. Zentz is currently engaged in a lawsuit with his former employer.
"The duties of a Portfolio Manager included, but were not limited to, 24-hour monitoring of the portfolio; exercising the trades indicated by the computer-generated trading systems; securing the best executions for trades based on the computer-generated trading systems; analyzing the output of the trading systems in order to identify possible input or output errors; generating and executing proprietary trading ideas to add return to the portfolio or reduce transaction costs; assisting in the reconconciliation of statements and positions; and assisting the sales force in raising new investor fund," the lawsuit asserts. "I didn't get paid what was deserved," says Zentz, who filed a lawsuit against his former employer in 2010 after being fired. Zentz had also brought allegations of various financial improprieties conducted by FX Concepts CEO John Taylor; however, these allegations have been dismissed, according to the firm.
Philip Simotas, President and Director of Investment Management at FX Concepts, tells aiCIO: "Michael was fired for cause. It's very good reason."
When asked about how the firm has handled high turnover and a sharp drop in assets under management, Simotas asserts: "We've been managing the volatility just like everyone else is. This company has been operating since 1981 and has gone through up and down cycles in the market. This turnover isn't unique."
Yet the flurry of departures raises questions. Along with Conkin, O'Grady, Holleman, and Sacco, other departures -- people who have either resigned or been layed off within the last year -- have included Laurie Pisano, FX Concepts' director of investment administration for nearly 20 years, and Lauren Orlouski, former portfolio administrator. Others include Max Spiess, Lachandra Jones, Funmi Ajao, Martin Hlusek, Ed Snelson, and Yue Wu.
According to FX Concepts, however, a significant number of these departures occurred for purely personal reasons.
[This article has been amended to reflect the correct date of the lawsuit brought by Mr. Zentz and the dismissal of allegations brought against Mr. Taylor.]