Last year forex dealer SNC Investments sold off its forex business because they were unable to meet the NFA’s $5 million capital requirement. But it appears that they stayed in business as a Futures Commission Merchant and Money Manager. They are in business no more. Let’s roll the tape from the NFA complaint…
National Futures Association | News Center
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On October 29, 2008, the CFTC contacted NFA. The CFTC advised NFA that it had received a telephone call from attorney David Serepca of San Carlos California, who said that he represented an individual by the name of Chris Lee. Serepca told the CFTC that, in April 2008, Chris Lee had written a check for $500,000 to SNC Asset Management and Kenneth Lee for the purpose of investing in a fund which would trade forex. Serepca said that he and his client had met with Kenneth Lee on October 29, 2008 and were told by Kenneth Lee that Peter Son (SNC CEO) had disappeared, and that customer money was missing.
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Gotta love these CEO’s who just cut and run the moment everything goes pear shaped. I can picture Peter Son now, dressed up in drag like Jefferson Davis trying to escape the Union Army after the surrender of the Confederacy. Another forex fugitive gallops off in the dead of night…
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On October 29, 2008, another principal of SNC, Young Choi – who worked at SNC’s main office in New York City – advised NFA that SNC was out of business and wished to withdraw its NFA membership. In addition, NFA became aware of a newspaper article that appeared in The Korea Daily on October 29, 2008, which reported that SNC – a Korean investment firm located in California – was “closing its operations due to the global financial meltdown” and that “the partners of the firm have no power to revive the business.” The article also stated that the firm had been managing over $70 million and that “it appears many Korean investors may lose their investments in the firm.” The article reported that the main office of SNC had been closed since October 28 and that employees had been notified to no longer come to work. In addition the article reported that the “president of the firm, Peter Son, has not been reachable by many investors and that his cell phone has been off.”
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Well if you mismanaged $70 million you’d probably turn your cell phone off too. Better yet you’d probably have hurled it into the East River on your way to Macy’s to get fitted for that wig and frock…
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Based on the telephone call from SNC’s Young Choi advising NFA that SNC was out of business, as well as the information received attorney David Serepca, and which appeared in the Korea Daily newspaper article, on October 30, 2008, NFA auditors went to SNC’s main office at 40 Wall Street in New York City to inquire about Peter Son and his whereabouts and to determine if customer funds were missing. However, when NFA auditors arrived at SNC’s main office they found that it was closed and its doors locked. The auditors left a note on the door requesting that a representative of SNC contact NFA.
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Left a note on the door? Oh brother talk about closing the barn door after the horses have bolted… What could the note have possibly said? “Uh, Hello? You think you could let us regulators know what happened to that $70 million you had under management? Hope to hear from you. Warmest Regards, NFA.”
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Subsequently, NFA’s auditors were contacted by Young Choi, who agreed to meet with NFA’s auditors at SNC’s main offices at 40 Wall Street. Thereafter, NFA’s auditors did meet with Young Choi, who again indicated that SNC was out of business and that he had terminated the lease for SNC’s main office effective October 31, 2008. Young Choi also told NFA’s auditors that he first became aware of SNC Asset a few weeks ago, that he was unaware that it was involved in forex trading, and that it was this understanding that SNC Asset only invested in real estate. Young Choi further indicated that he did not know Peter Son’s whereabouts.
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There is always someone that gets left holding the bag in a stick-up. And Young Choi appears to be said bagman. Left behind to clean up Peter Son’s mess poor Young Choi must be ruing the day he ever joined SNC Investments.
The implosion of SNC is yet another lesson in the perils of sending money to poorly capitalized firms. There is no way of telling how many small firms are tottering on the brink of financial ruin in the wake of the global credit crisis that has wiped out billions of dollars in wealth. As always, conduct your due diligence and beware poorly capitalized firms like the late SNC Investments.
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