http://www.thestreet.com/markets/hedgefunds/10249291.html After taking a look at the article, it appears that the funds were not placed in the correct acct. Jim Roger's fund money was placed under Refco Capital Markets, NOT in segregated accts. Jim seems to be trying to make the argument that they should have been placed in segregated accts from day 1, but for unknown reasons were not. Boy, I'm glad all my trading losses have been from ACTUAL losses on my half, not Refco and Enron-style manipulations. smile:?)
He was either lying to you, or he had no idea as to the meaning of the term "segregated account". He probably has no idea. Why should he be worried about what happens to customers, after his job and his firm cease to exist? Re-read my posts in this thread if you want some idea of what this term really means, or better yet, do your research with the CME, the CFTC, and the NFA. My older postings in other threads would also contain additional details and additional links to show you what is meant by a "segregated account". This is because you don't even know what a segregated account is. You can lose all of your funds, in a broker bankruptcy involving large uncovered trading losses by other customers, even though your funds are placed in a segregated account and even though all of your trades were winning trades. You'll never understand this until you make an effort to do some research. You might start by searching and reading my earlier posts in this thread, and elsewhere on this website, if you want to learn. An additional risk arises if the broker chooses to break the law, and to transfer your funds out of the segregated account, even though it is against the law. Refco was doing this over and over again, on an almost daily basis, as far back as the early 1990s, long before Refco went bankrupt in 2005. Refco was able to avoid bankruptcy by taking unauthorized "loans" from segregated customer funds, using them as emergency money to cover Refco's debts temporarily, and then transferring them back in to the segregated accounts. The CFTC repeatedly fined Refco for this illegal conduct. The problem was that when Refco did this to funds belonging to Jim Rogers and others, Refco actually did go bankrupt, so that it was not able to pay back the "borrowed" funds into the segregated accounts. This is how the futures customers lost a billion dollars in segregated funds. I wrote about this in postings long ago in other threads, and I gave links.