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MF Global situation
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MF Global situation

  #51 (permalink)
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Was just reading this article on Zero Hedge called "Why The UK Trail Of The MF Global Collapse May Have "Apocalyptic" Consequences For The Eurozone, Canadian Banks, Jefferies And Everyone Else". I cannot post the link since I am new here and I need 5 posts to post links. The article was posted on December 7th, 23:06.

This bit, among others, caught my attention since I was just about to open a futures trading account.


Quoting 
And now we get back to the topic at hand: MF Global, why and how it did precisely what Lehman did back then, why it did this in London, and why its failure is a symptom of something far more terrifying than merely investing money in collapsing PIIGS bonds.


MF Global’s Customer Agreement for trading in cash commodities, commodity futures, security futures, options, and forward contracts, securities, foreign futures and options and currencies includes the following clause:

“7. Consent To Loan Or Pledge You hereby grant us the right, in accordance with Applicable Law, to borrow, pledge, repledge, transfer, hypothecate, rehypothecate, loan, or invest any of the Collateral, including, without limitation, utilizing the Collateral to purchase or sell securities pursuant to repurchase agreements [repos] or reverse repurchase agreements with any party, in each case without notice to you, and we shall have no obligation to retain a like amount of similar Collateral in our possession and control.”

So i went to check into all the customer agreements of Interactive Brokers (I started an application with them before trying out Mirus Futures) when you create a new account and sure enough, this passage was found in the last agreement before completing the account creation process.


Quoting 
17. IB’s Right to Pledge Securities and Other Customer Property: IB is authorized by Customer to lend either to itself or to others any securities and/or other property held by IB in Customer's account. Pursuant to applicable law, IB may, from time to time and without notice to Customer, pledge, re-pledge, hypothecate or re-hypothecate, all Customer securities and/or other Customer property, either separately or together with other securities and/or other property of other IB customers, for any amount due IB in any IB account in which Customer has an interest. IB may so pledge, re-pledge, hypothecate or re-hypothecate Customer's securities and/or other property without retaining in IB's possession or under its control for delivery a like amount of similar securities and/or other property.

On december 6th, I started an application at Mirus Futures (after reading many user feedback here, on futures.io (formerly BMT)'s forum) and I have also saved all of their agreements. The chosen clearing firm was Dorman Trading in this case. This excerpt can be found in "Futures Customer Agreement" while creating an account with Mirus Futures.


Quoting 
Property carried for Customer by Dorman shall be segregated as required by the Commodity Exchange Act and the rules of the Commodity Futures Trading Commission (the "CFTC"). Subject to such segregation requirements, Customer hereby acknowledges that Dorman is specifically authorized, from time to time and without notice to Customer, either separately or with others, to invest, lend, pledge, repledge, hypothecate or rehypothecate, either to Dorman or to others, any and all Property (including, but not limited to, metals, warehouse receipts, or other negotiable instruments) held by Dorman in Customer’s Account and shall not at any time be required to deliver to Customer identical property, but may fulfill its obligations to Customer by delivery of property of like or equivalent kind or amount.

I'm quite worried about opening a futures trading account at all now.

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  #52 (permalink)
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----------------------------------------------------------


Last edited by Delta_Panther; December 8th, 2011 at 12:44 PM.
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  #53 (permalink)
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It seems like the billion just vanished and nobody knows...
Corzine: Don?t Know Missing Funds Location - Bloomberg


Seems not to be the first time, very similar: Refco - Wikipedia, the free encyclopedia

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  #54 (permalink)
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MW Not Just Corzine who can't find the money


Quoting 
By Marketwatch

NEW YORK (MarketWatch) -- Jon Corzine , the former chief executive of now-bankrupt MF Global Holdings Inc. , began the day by saying, "I simply do not know where the money is."

And as the House Agriculture Committee slogged through its hearing Thursday, it became increasingly clear that he's not the only one. Committee members are at a loss. So is the bankruptcy court. The media has gotten it wrong. .

And the regulators -- in this case, the Commodities Futures Trading Commission -- are really baffled.

Odds do not look good that we will get an answer to the question on everyone's mind: Just where is that $1.2 billion in missing cash?

The morning's testimony was confused. Committee members had difficulty understanding just what agency was to be regulating MF Global . The answer was both the CFTC, for its futures operations, and the Securities and Exchange Commission , for its broker/dealer. (Thank you, Rep. Collin Peterson of Minnesota .)

Meanwhile, even promising moments disappointed. Asked if the CFTC had looked at MF Global's daily balances for segregated accounts, the reports that show where client money is being held, commissioner Jill Sommers sheepishly said, "We don't look behind those reports." In other words, they're not verified.

Corzine is now settling into the chair for his meeting with the panel. Barring a shocking departure from the script, expect him only to add to the frustrating mystery of MF Global.

(END) Dow Jones Newswires
12-08-11 1320ET


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  #55 (permalink)
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Being a CEO in a company, being in charge of bets of Billions of value and finally telling: I do not have any f**** ing idea where any money went to protect my bets it just ridiculous.

How the hell does he think how stupid people out are there?

And even he may could say:

I only did what the law allows: That would be the worst any system could do to his residents.

God protect America and its residents and the whole world from such laws.

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  #56 (permalink)
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I watched part of his testimony in front of congress yesterday. He essentially gave the three monkeys defense, I did not see, I did not hear, I don not know what happened to the money!

In the testomoney it came out, John Corzine locked horns with MF Globals risk manager, essentially forced him to leave early part of this year. also threanted to resign if the board didn't go along with his european bets.

Some of the congressmen asked that he is a man of great wealth, would he make the accounts whole from his personal wealth! I think bad things, as in financial ruin via lawsuits await Corzine...

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  #57 (permalink)
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The Last Word on MF Global, from XtraNormal

MF Global Explained - YouTube

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  #58 (permalink)
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j4W4a7V7 View Post
W...
I'm quite worried about opening a futures trading account at all now.

in the IB account line of your post it says
..for any amount due IB in any IB account in which Customer has an interest.

So my reading of this is that it is only if you owe them money.

-------------------------------------
However, above and beyond the actual agreement my opinion of the reality for all futures firms is
"we have the right to steal any money you have and will ignore all rules and regulations of the FCA, CME and anyone else that we are supposed to follow - because we have lots of lawyers and no morals whatsoever."

The money in customer accounts was never an asset of MFGlobal. According to their own 10K annual report they have to balance on a daily basis with the CME. The "segregated accounts" is just something they laugh at.
(re "missing" customer funds.)

If you get a small firm and find a broker that will hold your check until you make about a trade and then wire or mail you your entire account balance at the close of the trade - like each day - then hide your money in a mattress you may have a chance of not being robbed.

The trustee is the same firm that milked the Lehman bankruptcy for 144million - so they'll milk this thing forever chalking up enormous fees for themselves.

the money is Giddens,, Giddens,, gone!

Keep your mind in the future, in the now.
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  #59 (permalink)
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aquarian1 View Post
in the IB account line of your post it says
..for any amount due IB in any IB account in which Customer has an interest.

So my reading of this is that it is only if you owe them money.

-------------------------------------
However, above and beyond the actual agreement my opinion of the reality for all futures firms is
"we have the right to steal any money you have and will ignore all rules and regulations of the FCA, CME and anyone else that we are supposed to follow - because we have lots of lawyers and no morals whatsoever."

The money in customer accounts was never an asset of MFGlobal. According to their own 10K annual report they have to balance on a daily basis with the CME. The "segregated accounts" is just something they laugh at.
(re "missing" customer funds.)

If you get a small firm and find a broker that will hold your check until you make about a trade and then wire or mail you your entire account balance at the close of the trade - like each day - then hide your money in a mattress you may have a chance of not being robbed.

The trustee is the same firm that milked the Lehman bankruptcy for 144million - so they'll milk this thing forever chalking up enormous fees for themselves.

the money is Giddens,, Giddens,, gone!

Might want to check this out.
The Denials Begin: Interactive Brokers Is First To Claim It Has Not Engaged In Commingling Rehypothecation | ZeroHedge

Rumor Of Swedbank Failure Results In Second Latvian Bank Run In One Month | ZeroHedge

I have growing concerns that every bank does this and that my money wouldn't be safe anywhere.

Been thinking about turning all my paper money into physical precious metals, but then I will have a whole new set of headaches with the storage/hiding practices.


Last edited by JustinIsHere; December 12th, 2011 at 08:07 AM.
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  #60 (permalink)
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Another update


And the plot thickens.

Mr. Corzine in Washington, With No Pull: William D. Cohan - Bloomberg

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