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

  #381 (permalink)
Identify Evaluate Execute
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liquidcci View Post
Problem is all of these are so so for trading futures. Depends how you trade I guess.

@liquidcci

That's true. Most of my trades now are fairly relaxed semi algo 50 -100 tick swing trades using limit orders or stop market orders queued well in advance. Slippage on triggered stops seems in line with the norms for the liquid instruments I trade.

The IB feed is poor so I use AMP's zenfire which I'm completely satisfied with. For executions I've noticed no difference between AMP and IB. I used to use TOS for options which was erratic but seems to have become stable under TD ownership. Wally said the executions are good at TOS. I've read your posts on how being close to the exchange helps quite a bit with latency and see how this would be important for shorter time frame traders using predominantly market orders.

Cheers
DJ

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  #382 (permalink)
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Source: Peregrine Customers? Claims Priced at 25 Cents on Dollar - Bloomberg


Quoting 
Customers’ claims on Peregrine Financial Group Inc., whose founder is accused by regulators of misappropriating more than $200 million, may fetch less than a quarter of their value in the wake of the firm’s bankruptcy, a trader said.

Quotes of 22 cents on the dollar to 25 cents were given to half a dozen Peregrine customers yesterday who called CRT Capital Group LLC, which buys and sells distressed debt, said Joseph Sarachek, managing director of claims trading. He is being “deluged” by calls today, he said. By comparison, bankrupt MF Global Inc.’s U.S. claims have always sold in the high 70s, he said.


July 11 (Bloomberg) -- Scott O’Malia, a commissioner on the U.S. Commodity Futures Trading Commission, talks about its lawsuit against Peregrine Financial Group Inc. for an alleged $200 million "shortfall" in client funds, and the outlook for further regulation in the futures industry. O’Malia speaks with Stephanie Ruhle and Erik Schatzker on Bloomberg Television’s “Market Makers.” (Source: Bloomberg)

Peregrine filed for bankruptcy July 10 after the U.S. Commodity Futures Trading Commission sued alleging the brokerage and its founder, Russell Wasendorf Sr., “used customer funds for purposes other than those intended by its customers, and consequently, have misappropriated these funds.” False reports on customer funds were also filed with the CFTC, the regulator said.

“This is much messier than MF Global because it appears there is fraud involved, based on the CFTC complaint,” Sarachek said.

A judge ordered a freeze of Peregrine’s assets at the CFTC’s request. The brokerage offered futures, cash, foreign exchange and options on futures trading.

Steeply Discounted

The missing money is about half of Peregrine’s customer funds, according to regulators. The steeply discounted prices for claims show uncertainty about how long it will take to get paid whatever money can be recovered, said Brian Coppola, a trader of distressed debt at hedge fund Fulcrum Capital in Austin, Texas.

“You have to figure out how many cents are going to come back to the estate and how long it will take,” he said. “Even if you can see 50 cents coming back, it could take five years. There are going to be lawsuits that hold up the distributions.”

Fulcrum, which is looking for larger Peregrine claims, is quoting prices in the low 20s, Coppola said. Most of the claims up for sale now have a face value of less than $200,000, he said.

Bank Records

Peregrine reported about $400 million in customer- segregated funds around June 29, of which $225 million was on deposit at U.S. Bank, according to the National Futures Association. The regulator said it learned that Peregrine’s chairman “may have falsified bank records” after finding only $5 million on deposit.

Peregrine is being probed by the U.S. Federal Bureau of Investigation, said Sandy Breault, a spokeswoman for the agency’s Omaha, Nebraska, office.

MF Global (MFGLQ)’s failure was the first time a futures brokerage’s collapse led to the loss of customer money, which is supposed to be segregated in separate accounts, according to futures industry leaders. Parent company MF Global Holdings Ltd. filed the eighth-largest U.S. bankruptcy last year with debt of almost $40 billion after making $6.3 billion in bets on sovereign debt and getting margin calls. A $1.6 billion shortfall in customer funds remains.
The Peregrine bankruptcy case is Peregrine Financial Group Inc., 12-27488, U.S. Bankruptcy Court, Northern District of Illinois (Chicago). The CFTC regulatory case is U.S. Commodity Futures Trading Commission v. Peregrine Financial Group Inc., 12-cv-5383, U.S. District Court, Northern District of Illinois (Chicago).

To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net
To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

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  #383 (permalink)
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Big Mike View Post
Just thinking out loud.

If Jr on the 6th thinks things are suddenly looking better, do you think that Sr was lying to him? But that still leaves the whole shotgun wedding (presumably to protect assets) with a bad taste, I mean why the shotgun wedding, and the rush'd POA, if things were peachy?

But why would Jr send an email telling everyone things are peachy and they are getting their salary cuts back, hurray, if things were not good... I mean it would just be implied that the prior cuts would remain in effect, no email was necessary...

Just .... interesting.

Mike

Yeah, I noticed the strange timing on the Power of Attorney mentioned in the bankruptcy filing - it was dated July 3rd. Sr knew that the regulator was getting suspicious about PFG not using electronics verification and she would finally pick up the phone and call the bank to confirm funds. BTW, the NFA regulators were not concerned about verifying funds via snail mail to a major bank that uses a PO Box in Cedar Falls, Iowa?

The facts are pointing toward Sr committing fraud for two years, but could he do so without Jr's being aware? If Jr was involved, how could they expect to get away with this scheme? Their records won't be audited by a one person firm operating out of a spare bedroom, now will they?

Jr: "Gosh, I had no idea at all - in fact I sent our employees a glowing letter just one day before the ."

Interesting indeed.

EDIT: Add link to Rueters story: http://www.reuters.com/article/2012/07/11/us-broker-pfgbest-idUSBRE86A1AK20120711


Last edited by ddnut; July 13th, 2012 at 02:17 AM. Reason: typo
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  #384 (permalink)
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Protections for futures accounts vs forex accounts



I wonder how they will divide up the assets between futures accounts and forex accounts. In the discussion regarding Tradestation insurance, their statements were that for futures accounts TS was required to maintain segregated accounts and reserve, while the forex section only mentioned the reserve requirement. Are forex funds required to be maintained in segregated accounts as well? If not are the futures traders in a slightly better position? Damn! How far down does this rabbit hole go?


Last edited by ddnut; July 13th, 2012 at 02:29 AM. Reason: add title
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  #385 (permalink)
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The difference is that yes they do post their audited financials and they do show where your money is....

McGladrey & Pullen operates in an alternative practice structure with RSM McGladrey.

I think their 2011 RCG financial statement should be carefully read. It's public so I can attach. RCG drown 25 million from the line credit (for what ?). RCG had proprietary trades losses. Finally what is written in the notes .4 (page 11) is somewhat ambiguous. I am not a statement expert but many here know how to read it between the rows.

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PFGBest Accounts Frozen (PFG scandal big thread)-2011financialstatement.pdf  
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  #386 (permalink)
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ddnut View Post
I wonder how they will divide up the assets between futures accounts and forex accounts. In the discussion regarding Tradestation insurance, their statements were that for futures accounts TS was required to maintain segregated accounts and reserve, while the forex section only mentioned the reserve requirement. Are forex funds required to be maintained in segregated accounts as well? If not are the futures traders in a slightly better position? Damn! How far down does this rabbit hole go?

I am not up on the latest regs, but forex is un regulated for the most part. They do not have central clearing so the broker just needs to keep enough to satisfy the CFTC (RFED )and the banks that they are trading with.

Math. A gateway drug to reality.
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  #387 (permalink)
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Silence Exp View Post
I think their 2011 RCG financial statement should be carefully read. It's public so I can attach. RCG drown 25 million from the line credit (for what ?). RCG had proprietary trades losses. Finally what is written in the notes .4 (page 11) is somewhat ambiguous. I am not a statement expert but many here know how to read it between the rows.

Unfortunately this is the internet where professional credentials and backgrounds are not required to offer profound accounting and legal opinions ad nauseum ....

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

My daddy always said, "Every day above ground is a good day!"

Last edited by ThatManFromTexas; July 13th, 2012 at 06:12 AM. Reason: Piss Poor Typing
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  #388 (permalink)
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The solution...

I know how to solve this problem.

We organize a mass campaign with thousands of retail traders and schedule a week (across all known forums), in which we all pull out all our money out of our brokerage accounts (whether futures, securities or forex) and transfer it to our regular bank accounts.

That way, the weak brokers and the fraudulent ones will probably collapse and the good and strong ones are filtered.

Though, I don't know whether one week is enough for this, but I'm sure that this would have an impact. At least, the companies would start to take their self-regulation finally serious. I would be willing to do this even for a month (take a holiday, do something else in the meantime... I know, this might be difficult for some ).

What do you think?

I mean, what else can we do?

The suggestion to spread your capital across many brokers in order to spread your risk might make sense from an individual point of view. But in the aggregate, that way the weak and fraudulent ones are only kept alive longer, as they get also money from new accounts opened by traders from other brokers.

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  #389 (permalink)
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karoshiman View Post
I know how to solve this problem.

The problem with that, is that one medium sized hedge fund probably has an account balance equal to 1,000 well funded typical retail traders.

And they aren't going to do as you suggest, because they need to be in the market every day.

So in other words, the impact of retail money alone wouldn't be enough.

I think, first and foremost, don't over-react.

Put pressure on your FCM but I would put just as much, if not much more, pressure on your Congressman. Because that is where the real solution needs to come from, in terms of SIPC type insurance for futures accounts.

Mike

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

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
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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  #390 (permalink)
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Big Mike View Post
The problem with that, is that one medium sized hedge fund probably has an account balance equal to 1,000 well funded typical retail traders.

And they aren't going to do as you suggest, because they need to be in the market every day.

So in other words, the impact of retail money alone wouldn't be enough.

I think, first and foremost, don't over-react.

Put pressure on your FCM but I would put just as much, if not much more, pressure on your Congressman. Because that is where the real solution needs to come from, in terms of SIPC type insurance for futures accounts.

Mike


You are right Mike with the hedge funds. On the other hand, brokers which have also a decent amount of hedge fund money, and hence, are not impacted by such campaign, might be the more secure brokers anyway.

I assume that the smart money is not only smart when it comes to participation in the markets but also when it comes to broker selection. At least smarter than we retailers are...

I would have agreed to your statement to not over-react after the MF Global incident, but now, from my point of view there can be no such thing as over-reaction.

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