With all the talk about Refco, I finally recalled where I heard of Refco first: ----------------------------------------------- Hillary Clinton Futures Trades Detailed By Charles R. Babcock Washington Post Staff Writer Friday, May 27, 1994; Page A01 Hillary Rodham Clinton was allowed to order 10 cattle futures contracts, normally a $12,000 investment, in her first commodity trade in 1978 although she had only $1,000 in her account at the time, according to trade records the White House released yesterday. The computerized records of her trades, which the White House obtained from the Chicago Mercantile Exchange, show for the first time how she was able to turn her initial investment into $6,300 overnight. In about 10 months of trading, she made nearly $100,000, relying heavily on advice from her friend James B. Blair, an experienced futures trader. The new records also raise the possibility that some of her profits -- as much as $40,000 â came from larger trades ordered by someone else and then shifted to her account, Leo Melamed, a former chairman of the Merc who reviewed the records for the White House, said in an interview. He said the discrepancies in Clinton's records also could have been caused by human error. Even allocated trades would not necessarily have benefited Clinton, Melamed added. "I have no reason to change my original assessment. Mrs. Clinton violated no rules in the course of her transactions," he said. Lisa Caputo, Clinton's spokeswoman, said the documents were released yesterday "to give as complete a picture as possible" of her trades. She said Clinton had never before seen them. Blair, who urged Clinton to enter the high-risk futures market and ordered most of her trades, said in a recent interview that he "talked her into" her first futures trade in October 1978 before paperwork on her account was completed. It was liquidated quickly, he recalled, because "it was bigger than she wanted and required more money." A close examination of her individual trades underscores Blair's pivotal role. It also shows that Robert L. "Red" Bone, who ran the Springdale, Ark., office of Ray E. Friedman and Co. (Refco), allowed Clinton to initiate and maintain many trading positions â besides the first â when she did not have enough money in her account to cover them. Why would Bone do so? Bone could not be reached for comment, but Blair said he thought he knew why. "I was a very good customer," he said, noting he paid Bone $800,000 in commissions over the years. "They weren't going to hassle me. If I brought them somebody, they weren't going to hassle them." Besides, he added, Bone would not worry if he agreed with his clients' bet on which way the price of a given contract would go. Blair, who at the time was outside counsel to Tyson Foods Inc., Arkansas' largest employer, says he was advising Clinton out of friendship, not to seek political gain for his state-regulated client. At the time of many of the trades, Bill Clinton was governor. Hillary Clinton has said she made all the trading decisions herself and has tried to play down Blair's role. But she acknowledged in April, three weeks after her trades were first disclosed, that Blair actually placed most of the trades. Blair advised Clinton again on July 17, 1979. He recalled that she started that trading day by losing $26,460 on 10 cattle contracts she had held for more than a month, by far her worst loss as a futures player. On his recommendation, he said, she immediately went back into the market. She acquired 50 new cattle contracts â worth $1.4 million -- and when the price moved in her favor, unloaded them around noon for a quick gain of $10,550. This recouped part of her loss. Blair said Clinton and other friends he suggested trades for had lost money that spring on feeder cattle. Those trades "caused everyone some grief," he said. "I'm sure I was pressing to get everyone back above water" in recommending the quick and bold day trade. The White House defense of Hillary Clinton's preferential treatment was that other customers in the same office also were allowed to trade without having enough cash in their accounts. While Clinton's account was wildly successful to an outsider, it was small compared to what others were making in the cattle futures market in the 1978-79 period. An investigation of the cattle futures market at that time by Rep. Neal Smith (D-Iowa) found that in one 16-month period 32 traders made more than $110 million in profits from large trades -- those of 50 contracts or more. Clinton traded positions of 50 or more contracts only three times. The records the White House released yesterday were part of an investigative file from 1979, when the exchange charged Bone and Refco with violations of its record keeping and margin requirement rules. Bone was suspended for three years; Refco paid a $250,000 fine, then the largest in the exchange's history. Internal memos from that investigation cover transactions from the same period in June in which Clinton was trading, but not the same trades. In one instance, the Merc found Bone and a fellow broker were ordering 1,000 cattle contracts at a time â far over the limit allowed at the time â and then allocating them to other customers. One internal Merc memo said "there is reason to believe" that a majority of Bone's accounts were traded without the clients' permission. Blair said that Bone at times traded his personal account without permission. Blair said he doubted Bone traded Clinton's account without her permission. Melamed said it was "impossible" to determine the exact cause for the discrepancies between the Merc computer record of Clinton's trades and the trading records she received from Refco, which the White House released earlier. She said that for six trades, her initial trading position in the Refco records were not reflected in the Merc documents. On one other trade neither her purchase nor sale was included. On that trade she netted $12,150 on 15 cattle contracts she held for four days. Clinton reported a loss of $2,480 on one of the trades in question, Melamed noted. One was a "day trade" on hog contracts that netted $2,553. Melamed said "day trades" are the only way to assure profit even if favorable trading positions are allocated to a customer's account. Any position held overnight would be subject to the rise and fall in prices in the volatile futures market, he added. Staff researcher Barbara J. Saffir contributed to this report. In commodities futures trading, an account that falls below the "maintenance margin" typically triggers a "margin call," where the trader must put up sufficient cash to cover the contracts. Although Hillary Rodham Clinton's account was under-margined for nearly all of July 1979, no margin calls were made, no additional cash was put up, and she eventually reaped a $60,000 profit. June 29 ......... $56,466 (Margin: Value account should have had to continue trading.) July 12 ........ -$24,243 July 17 ......... $22,537 (Account value: Total cash on hand plus (or minus) paper value of contracts.) July 20 ......... $61,537 July 23, 1979: She withdrew $60,000 and never traded again, closing the account in October. © Copyright 1997 The Washington Post Company