Your segregated cash is NOT safe, if your IB or FCM trading agreement contains the words "repledged, hypothecated, or re-hypothecated". Everyone, please check your trading agreements !!
MFGlobal had one or more of these words in their trading agreement. That lead to MFGlobal taking client funds without notice, and transferring the money into their own trading account. Client cash was comingled with MFGlobal's general account, and each client became an unsecured creditor. MFGlobal then purchased extremely speculative securities, and lost. The result was that the FCM declared bankruptcy and 40% or more of the client cash is gone. It seems that the CFTC does not want to honor the fact that segregated accounts, are the same as a trust account.
The USA also does not presently have insurance for such an event. However, Canada does have insurance for commodity traders in the amount of $1,000,000. Go to www.cipf.ca/ to view the details. I urge all members of TimingCharts.com to request from their IB and FCM the following:
1) insurance, or the creation of a Canadian subsidiary.
2) transfer all of your accounts to Canada until the problem is corrected in the USA.
3) proof that no future client trading account agreements will contain the words "repledged, rehypothecated, hypothecated", or any other creative word to mean the same thing.
Thanks for sharing that Hedger. The brokers we trust our money with is something most of us probably don't think enough about. I came really close to losing money when Refco went belly up. I placed a little money with them to trade Forex sometime around 2004. This was when retail Forex trading was still fairly new so I didn't put much money there, I was just trying to learn the difference between trading retail forex and currencies on the CME exchange. I didn't like the large spreads so I never committed more money to them, they failed within a year. Luckily I liquidated that account before that happened.
One thing that really made an impression on me was they would guarantee your stop loss price. This seemed so out of the ordinary that I contacted Refco to ask about them to explain it to me. The rep told me that yes, "we guarantee your stop loss price, no matter what happens with price". It seemed like they were taking such a huge risk guaranteeing stop prices. I mean, anyone familiar with the markets knows that the bid can disappear on a bad report. How could they systematically manage a hedge that changes on a second by second basis at every singe pip? I figured they were just a lot smarter than me to pull that off :-)
Shay Campbell
Timing Charts, LLC
The trend is your friend until the end, when it bends.
NFA # 0059204 : That is the NFA number for former Vice President Rick Leesley, of MF Global's private client division.
Jon Corzine claims he did not know what was going on at MFGlobal. Liar. Liar. Back in June 2011, Leesley wrote a letter to clients advising them that their money may not be accessible in the event of a dispute. Corzine was Leesley's superior. So, MFGlobal was alarming their clients 6 months ago. As a client, I thought OK, MFGlobal is in trouble. Maybe a future bankruptcy. I had 2 possible choices:
a) cancel my account, transfer the funds into MFG's general account and get a rubber check;
b) wait for the bankruptcy, and a merger, or a bankruptcy trustee check for the funds in the segregated account;
As it turned out, both would have been the wrong choice.
The CME claims that they did an audit just a few days before the bankruptcy. The CME claims they found nothing wrong. Well, either the CME is incompetent or is also lieing!!
If anyone from the FBI, CFTC, or NFA is reading this blog, perhaps you need to find out when the funds were "pledged, hypothecated, or rehypothecated". The trustee claims client funds were stollen in the last days before bankruptcy. Well, my client statement showed the money was still there after October 31st. So, if the client funds were stollen before October 31st, then the month end statement is fraudulent. Perhaps Rick Leesley also needs to be subpoenaed to a grand jury for questioning.
Regulation T
Will removing "re-hypothecation" cause liquidity to dry up and cuase the futures industry to implode ?
Or, will NOT removing re-hypothecation and allowing fraud, cause the futures industry to implode ?
That seems to be the questions of the day.
The real question should be, will there be a panic, or an orderly exit ? Who will be the next FCM to go bankrupt in the domino effect ?
Close my Account: says, Warren Pollock to Fidelity.
If my money is hypothecated or rehypothecated, prove that it is deliverable.
If you can not prove delivery, then close all of my accounts.
http://www.youtube.com/watch?v=GMI6JYX2e0Q
I've been told that a good portion of the MFG funds have been returned to the account holders, around 70% so far. Any luck on your end Hedger?
Shay Campbell
Timing Charts, LLC
The trend is your friend until the end, when it bends.
James Koutoulas appears to be getting some headway on behalf of thousands of former MFG customers. His goal is 100% re-imbursement of the segregated funds. He now has the support of the US Congress. See the link for the endorsement letter below : http://www.btrtrading.com/Legal/Letter_from_Congress.pdf
The MFG Trustee sent the first installment directly to RJ O'Brien without my permission.
I have not received any account forms from RJ O'Brien to even know if they will be re-hypothicating the remaining funds. After seeing the Warren Pollock video on Youtube.com, I suspect that the re-hypothicating continues with all of the brokers. The MFG Trustee has sent claim forms which I need to send back to get the top up to 70% for the next round of release.
Hedger
Without my permission, the MFG Trustee transferred the first round of release to RJ O'Brien.
RJ O'Brien has never sent me any account forms to advise if the re-hypothication continues. However, if they are anyhting like Warren Pollock discovered from his broker Fidelity, the re-hypothecation continues.
The Trustee has just sent me some forms so that I can get a top up in the next round. I do not know yet how much that is, but need to get the forms back to the Trustee.
US Congress has sent a letter addressed to the CFTC to get 100% of the segregated funds back to the clients. The US Congress is concerned that this could be the beginning of a systemic failure of the entire US financial system.
U.S. Congress letter to CFTC & SEC regarding MF Global segregated funds; signed by the following Members of Congress : Joe Walsh, Donald Manzullo, Randy Hultgren, Timothy Johnson, and Adam Kinzinger.
http://www.btrtrading.com/Legal/Letter_from_Congress.pdf
MF Global - Class Action filed January 12, 2012. ( its a long read at 80 pages long)
http://www.gata.org/files/MFGlobalClassAction-01-12-2012.pdf
Trader's actions speak louder than words.
CME's refusal to make traders whole after MFG bakruptcy, is beginning to show severe consequences.
http://www.reuters.com/article/2012/02/08/cme-rating-idUSL2E8D8FC420120208