Sorry MoFos; You can't withdraw your money

Discussion in 'Trading' started by ByLoSellHi, Aug 14, 2007.

  1. Niiiiice....

    Sentinel Management Group Seeks to Halt Redemptions (Update3)

    By Jenny Strasburg and Matthew Leising

    Aug. 14 (Bloomberg)
    -- Sentinel Management Group Inc., the Illinois-based firm that manages $1.6 billion, said it asked regulators for permission to freeze client withdrawals because credit-market turmoil made it impossible to trade.

    The firm, based in the Chicago suburb of Northbrook, contacted the Commodity Futures Trading Commission for approval to halt redemptions ``until we can honor them in an orderly fashion,'' according to an Aug. 13 letter to clients.

    The CFTC hadn't granted permission as of this morning, said an assistant to Eric Bloom, Sentinel's president and chief executive officer, who declined to be identified. Bloom didn't return calls for comment.

    CFTC spokesman Dennis Holden declined to say whether the firm's request had been received.

    ``We are aware of the situation and we are monitoring it.''

    The firm said it was a victim of panic by investors caused by the collapse of the subprime-mortgage market.

    ``Investor fear has overtaken reason and has induced a period in which most securities have simply ceased to trade,'' according to the client letter, which does not specify which funds are affected. ``We are concerned that we cannot meet any significant redemption requests without selling securities at deep discounts to their fair value and therefore causing unnecessary losses to our clients.''

    Sentinel invests for clients such as managed-futures funds, high-net-worth individuals and hedge funds that want to be able to withdrawal their cash quickly. Its investments include short- term commercial paper, foreign currency, investment-grade bonds and Treasury notes, according to its Web site.

    Multiple Regulators

    The firm is regulated by the CFTC, National Futures Association and U.S. Securities and Exchange Commision, according to its Web site.

    ``The decision whether to halt redemptions appears to be a business decision by Sentinel pursuant their contract with their customers and not a regulatory issue,'' said Dan Driscoll, the NFA's chief operating officer, said in a telephone interview.

    Sentinel's clients include so-called futures commission merchants, businesses that manage buy and sell orders for commodities futures contracts. FCMs are required by the CFTC to keep their customers' money segregated from funds they invest on their own behalf. By that measure, Sentinel is 17th in terms of customer money for U.S. FCMs, according to July 31 data from the CFTC.

    FCMs make money by earning overnight interest on their customers' cash on hand.