Penson

Discussion in 'Retail Brokers' started by JohnTrader, Mar 28, 2012.

  1. Any concerns about Pensons (PNSN) credibility?
    It is trading below 70 cents per share. Are there chances it will become MF Global and traders may lose their accounts with them?
     
  2. a firm's stock price has nothing to do with the integrity of their operations. the lower price reflects lower confidence in their company, but who knows what that confidence is based on?
     
  3. Pippi436

    Pippi436

    Some -90% YoY, sounds like a lot less confidence.
     
  4. this statement is incorrect.
     
  5. Catoosa

    Catoosa

    With the size of Penson's consecutive negative earnings reports, I do not see how Penson has avoided insolvency and bankruptcy. I expect Penson to sell out to a stronger clearing firm who wants Penson's client accounts provided all of the client's funds can be accounted for. While Penson's client accounts look safe, you never know until it is too late as with MF Global. Desperate company managers can do desperate things with other people's money in an effort to save a doomed sinking ship.
     
  6. I don't think Penson is anything like MF Global. At MFG you had a CEO with a huge ego over leveraging the company's balance sheet, when the bet went against him he grabbed what ever money he could to cover margin with the counter-parties. I am 99.9% sure that there is no fraud going on at Penson and rumor has it the Futures division performs well.

    Worst case scenario, Penson goes bankrupt and you go a day without trading while your account is moved to RJO. If Penson does go bankrupt, I think there is a good chance that some-other player will buy the futures division, so there wouldn't be any stoppage of service for futures clients. I actually think that could happen without Penson going bankrupt.

    Its been able to stick around for a year with a $1 stock because there is no fraud going on, at least thats how I see it.

    5yr
     
  7. rmorse

    rmorse ET Sponsor

    It's impossible to see a crime like MF Global before it happens. However, there is no reason to believe that Penson Financial and Penson Futures will commit a crime like MFG. They have had some operational challenges over the past year, including losing a large customer, TOS. Currently, even with those challenges, they have a large excess capital on their books. They are in the middle of a large restructuring, that will convert most of their debt to common. This will save them around $30mm per year in interest.

    In the end, we are Introducing Brokers to Penson. We've had propective clients say, I don't want Penson. Then they realize they can't run their business in the same way they need to, because of restrictions at other brokers, margin call requirements at other brokers, and risk controls at other brokers. For Futures traders that need co-location on the CME, that have rack space at reduced prices. They give us and our clients a great deal of flexibility.

    And one more thing. LEH, BS and MFG all went out of business because of their trading activities. Penson has no prop desk.

    Bob
     
  8. Catoosa

    Catoosa

    I agree with rmorse's post above in that there is much to like about an account cleared through Penson. I like the way Penson has client accounts setup with futures account cash sweeps each night to the brokerage account side, check writing privileges, and access to client account records at Penson. I think Penson as with many clearing firm is suffering due to the Fed forcing interest rates to near zero for an extended period of time.
     
  9. Jreality

    Jreality

    "It's impossible to see a crime like MF Global before it happens."

    And even if you could see it, would the SEC ignore it like they ignored Madoff?
     
    #10     Mar 28, 2012