This research was ironically released on the same day the PFG fraud came to light. Since this thread also has some comments about the futures business and the integrity of the brokers in it, I thought it was interesting:
Hi. As mentioned in an earlier post, you have far greater exposure to theft if the broker is owned by one or a few people.
This is because there will likely be few or no compliance staff with the broker being in full control of the finances. At least with some of the larger brokers including Interactive Brokers, TD Ameritrade there needs to be collusion with multiple individuals across multiple departments to pull off grand scale theft. This is how Bernie Madoff got away with things for so long as it was only him and one or two others.
Because you have no insurance with futures and self regulation appears to be little more than a "friendship" club for the "old boys" of the industry, you are nearly solely reliant on the honesty of the owner/broker. But then you think, "I'm ok because my broker is such a nice guy". Then you remind yourself that so was Bernie Madoff by all accounts. Here is another fraud case from today with a supposed nice guy:
"Wendy Cross moved about $300,000 to Price's firm after a trusted financial adviser told her it would be a good investment. She met Price in person once. She described a very religious, soft-spoken man with a gentle demeanor and an air of kindness."
What would assist in putting some jittery minds at rest would be for the owners or representatives of the firms doing business with members of futures.io (formerly BMT) to post certified copies of their current segregated fund bank statement showing total client funds (details can be shaded out) and their total client fund ledger(confidential info shaded out).
This is not suggesting in anyway that futures.io (formerly BMT) member brokers are dishonest but this type of proof and assurance would go a long way to calming the nerves of clients.
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Yes and one thing people have to understand.... I've seen several posts about people wanting to move to a larger, safer institution. MF Global was huge, and incredibly unsafe.
The days of looking for size as protection are gone. Looking at numbers on a piece of paper or in an Excel column are worthless, since the numbers are fabricated easily.
The point is, you can't trust anyone or anything right now. And this will remain the case until their is legislation which basically provides insurance for customers (SIPC/FDIC type).
I think this will happen eventually. But the question is what happens between now and then.
Basically, if you are a professional trader you simply need to be smart. You can't just take all your money out and wait on the sidelines. But you can make sure your account balance is only what it really needs to be, and not more.
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