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PFGBest Accounts Frozen (PFG scandal big thread)
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PFGBest Accounts Frozen (PFG scandal big thread)

  #311 (permalink)
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kevinkdog View Post
Even though Tradestation calls this "excess SIPC insurance," I have confirmed with Tradestation that it DOES COVER futures accounts (as karoshiman stated).

Sorry again for doubting you karoshiman. I've been TS customer for 8 years, and I never knew this "excess policy" existed. I hope we never need it, and if we do, I hope it covers things!

**********************
From: ClientService@tradestation.com

Dear Mr. Davey,


The additional coverage through Lloyds of London applies to all TradeStation brokerage accounts, including futures.



For further inquiry into this matter, please reply to this email or call the Client Services Department.



Sincerely,

Daniel



@kevinkdog

If what they have told you is accurate, kudos to them for going the extra mile.

However, security is relative ... all is well as long as ...

1. The policy remains in force (TS continues the coverage)

2. Claims don't exceed amount insured

3. TS actions do not violate conditions of the policy (theft, fraud, etc)

4. Lloyd's remains solvent (example: European Banks insured and the euro collapses breaking Lloyds')

5. Claims are paid out in a timely fashion (i.e. Denied claims end up in court for resolution,Lloyds goes into receivorship)

That said , if TradeStation is the only firm that offers the additional coverage and barring the above mentioned possibilities, they may very well be a more secure choice than other brokers.


Footnote: Lloyds is not without it's own issues


In the late 1980s and early 1990s, Lloyd's went through the most traumatic period in its history. Unexpectedly large legal awards in U.S. courts for punitive damages led to large claims by insureds, especially on APH (asbestos, pollution and health hazard) policies, some dating as far back as the 1940s. Many of these policies were designed to cover all liabilities not excluded on broadform liability policies.

Also in the 1980s Lloyd's was accused of fraud by several American states and the names/investors. Some of the more high profile accusations included:
Lloyd's withheld their knowledge of asbestosis and pollution claims until they could recruit more investors to take on these liabilities that were unknown to investors prior to investing in Lloyd's;
Enforcement officials in 11 U.S. states charged Lloyd's and some of its associates with various wrongs such as fraud and selling unregistered securities;
Ian Posgate, one of Lloyd's leading underwriters, was charged with skimming money from investors and secretly trying to buy a Swiss bank; he was later acquitted.

Good luck and I wish you the best!

Regards,
TMFT

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
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  #312 (permalink)
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FCM Redux

Everything you ever wanted to know about FCMs, or at least the fabricated information they choose to share with the NFA:

http://www.cftc.gov/marketreports/financialdataforfcms/ssLINK/fcmdata0412-xls

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  #313 (permalink)
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If it is as simple as FCM's procuring third party insurance to protect and incentivize their clients, then I would expect to see more of this soon.

It is still far from perfect, as the above post points out. But a step in the right direction, given the environment.

Mike

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  #314 (permalink)
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ThatManFromTexas View Post
@kevinkdog

If what they have told you is accurate, kudos to them for going the extra mile.
Footnote: Lloyds is not without it's own issues

Regards,
TMFT

@ThatManFromTexas raises some good points. As mentioned earlier an email from a customer services rep should be taken with a grain of salt as invariably they are unsure of the intricacy of the rules. I'd hate to see anyone else get caught out. Below is the tradestation insurance policy from the Tradestation website which makes it fairly clear futures accounts are not covered. See last sentence. If you opened a securities account there is coverage. The only issue that matters is the cash sweep and that is the question that needs to be asked.

If only have a futures account and no securities account then the only way to be covered is if all the cash is swept into one pot and insured. If the cash for futures accounts is kept separately from the cash for equities accounts then I don't see how there is coverage based on the insurance policy below. The Lloyds coverage kicks in after the SIPC and is still based on securities accounts.

Furthermore even if it was swept into one pot in the event of a claim SIPC would be within their rights to not payout on any cash relating to futures account.

"TradeStation Securities is a member of the SIPC. SIPC provides protection of up to $500,000 for each securities account brokerage customer, subject to a limitation of $250,000 for cash balances, in the event of the financial failure of a broker-dealer. For securities brokerage accounts the custody and clearing of and for which are handled by TradeStation Securities, an excess SIPC insurance policy placed through Lloyd’s of London provides coverage for loss of securities and/or cash in excess of primary SIPC protection, up to $300 million in the aggregate (and up to $24.5 million per any one account, subject to a $900,000 per account maximum for cash). Based upon the asset size per account and in the aggregate of TradeStation Securities’ securities account customer base as of the date of this report, this excess-SIPC protection, combined with primary SIPC protection, should, while no assurances can be given, be adequate to cover the loss of 100% of those customer assets in the unlikely event that TradeStation Securities experienced financial failure and all customer assets were somehow lost. Neither SIPC nor excess-SIPC coverage applies to fluctuations in the market value of securities or any losses other than those directly caused by the financial failure of a securities broker-dealer. SIPC does not apply in any manner to FCMs, RFEDs or FDMs or to futures or forex accounts"

SIPC clarified this in a letter to the SEC in 2007 when they wrote:

"Under SIPA, a customer's claim for "cash" derives from a few sources. One, the "cash" arises from the broker's sale of securities for the account of the customer. Two, the "cash" has been deposited by the customer with the broker for the purpose of purchasing securities. Three, the cash consists of dividends or other return generated on securities held by the broker for the customer. 15 U.S.C. $78lJ(2). Key is the fact that the cash owed by the broker to the customer is on deposit in connection with the purchase or sale of a "security," as defined in SPA. The facile labelling of an asset as "cash"does not transform it into a protected asset if unrelated to the purchase or sale of a "security." http://www.sec.gov/comments/s7-08-07/s70807-16.pdf".

Cheers
DJ

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  #315 (permalink)
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Personal "small, home auditor"
Exclusive: U.S. probing failed broker PFGBest's use of small auditor | Reuters

U.S. grains worries
U.S. grain trade wants answers in PFGBest broker scandal | Reuters

Mystery
http://finance.yahoo.com/news/pfgbest-mystery-deepens-vegas-marriage-205933638.html?l=1

video:
U.S. Morning Call: Iowa futures firm PFGBest collapses | Video | Reuters.com


Last edited by Cloudy; July 12th, 2012 at 01:19 AM.
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  #316 (permalink)
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Public Conference Call to Discuss PFG Wednesday 5:15pm EDT | Commodity Customer Coalition

The CCC will be hosting a public conference call to discuss the PFG fraud Wednesday at 5:15pm EDT. We will also be giving an update on MF Global and the recommendations we have provided to the Senate for strengthening customer protections in the futures industry.

The recording of the call is attached. The quality is not great, I did not have time to enhance the audio.

Mike

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  #317 (permalink)
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djkiwi View Post
@ThatManFromTexas raises some good points. As mentioned earlier an email from a customer services rep should be taken with a grain of salt as invariably they are unsure of the intricacy of the rules. I'd hate to see anyone else get caught out. Below is the tradestation insurance policy from the Tradestation website which makes it fairly clear futures accounts are not covered. See last sentence.

...


They talk about "loss of securities and/or cash" and not only "securities". And the margin in your futures account is essentially cash.

They have some further info on this site about safety of funds:

Safety of Funds for Futures Traders | TradeStation

There they state:

Your TradeStation equities accounts are further protected with SIPC insurance. SIPC insures your equities accounts up to $500,000, including $250,000 for cash. Beyond this, TradeStation has arranged for additional protection through Lloyd's of London, insuring all accounts up to an aggregate limit of $300 million.

This together with the statements by the TS reps (whether they understand the situation or not), would make it difficult for them to argue differently in case of a law suit (which hopefully will never happen). They've made their customers believe, that there is protection for futures accounts as well (up to the amount described above).

Though I see the points of TMFT and there might be a risk with Lloyd's as well, my concern is more about the conditions of the excess insurance, i.e. the cases which are covered by this excess insurance (bankruptcy, fraud, etc.?). I've sent them an email 2 days ago and asked about it and got the link above from them. Unfortunately, there they don't answer this question so I've sent them my question again, stating that this question is not answered on that page. See, what they will come up with...

By the way, that "safety of funds" page includes a lot of blah blah about regulation, separate accounts etc. which we know now does not mean anything. But, what I like is the fact that they are not involved in proprietary trading. This is one risk aspect less ...

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  #318 (permalink)
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Zchartist View Post
The Atlas Rating / ZeroHedge website is "NOT" a solid source :

Moneycation: Zero Hedge Website Review

Thanks for sharing your ZH site review, not vouching for them, but think the Atlas Rating #'s are interesting to review and keep in mind.

There can be no solid predictor of course of those things to happen and I wouldn't dare to imply that. It seems we as traders just have to be even more on our toes in those times and make sure our risk is balanced and spread out.

We have been systems trading now professionally for +7 yrs and have faired alright with cleaning up accts regularly.

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  #319 (permalink)
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karoshiman View Post

Your TradeStation equities accounts are further protected with SIPC insurance. SIPC insures your equities accounts up to $500,000, including $250,000 for cash. Beyond this, TradeStation has arranged for additional protection through Lloyd's of London, insuring all accounts up to an aggregate limit of $300 million.

I read the safety of funds page, and I don't see the same thing you see.

It says "Securities accounts" and "equities accounts".

It seems pretty clear to me that they are not talking about futures accounts. It does not matter if it is cash or not, it is the type of account.

I agrees with @ThatManFromTexas and @djkiwi

The customer service reps can say whatever they want, the courts will go with what is written on the contract you signed when you opened the account.

Math. A gateway drug to reality.
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  #320 (permalink)
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Except the title of the page is "Safety of funds for Futures Traders". Just need to email the CFO and get it in writing.

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
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2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
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4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
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If you want
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