Yet another and another class action lawsuit against MF Global...

Discussion in 'Stocks' started by crgarcia, Mar 23, 2008.

  1. They're gone.
     
    #11     Mar 23, 2008
  2. Wrong information.

    MF Global US futures accounts have the money deposited in the US into segregated accounts.

    If MF Global goes bankrupt, your account will remain active and tradable until it is transferred to some other firm. That's what happened with REFCO futures accounts.

    Your money is actually safer at MF Global than GS, LEH, MER, JPM, UBS, .... even IBKR. Why? Your funds aren't necessarily in segregated accounts at the latter. Even with SIPC and even in regulated markets, you will not recover all (or any of) your money if your funds are commingled with a bankrupt clearing firm's.

    All that Bermuda stuff is BS rumor/fear mongering.
     
    #12     Mar 24, 2008
  3. cstfx

    cstfx

    #13     Mar 24, 2008
  4. What I meant is that other brokers do not NECESSARILY put your funds into a segregated account, but they DO OFFER that option as your pdf points out.
    That's the problem Jim Rogers had with REFCO, his funds WERE NOT deposited into a segregated account, they were commingled with REFCO's as he opened his account through the prime broker division (I think that was the problem).
     
    #14     Mar 24, 2008
  5. cstfx

    cstfx

    OK, maybe I'm slow today, but I interpret this differently:

    column e:
    Customers' 4d(a)(2) Seg Required: This represents the total amount of funds that a FCM is required to segregate on behalf of customers (emphasis mine) who are trading on designated contracts markets (DCMs) and derivatives transaction execution facilities (DTEFs). This is the sum of all accounts that contain a net liquidating equity.

    http://www.cftc.gov/marketreports/financialdataforfcms/fcm_aboutreport.html

    Not meaning to be argumentative, but what am I not getting here? Seems straight forward. Could it be that the rules have changed since Refco?
     
    #15     Mar 24, 2008
  6. cstfx

    cstfx

    The thing with Refco and Rogers was that his funds were deposited in Refco Capital Markets (which were not protected when firm filed) used for offshore prime brokerage as opposed to being held with Refco LLC, the derivatives brokerage's futures business. If funds were deposited properly (Refco took it upon themselves to deposit funds with RCM in an attempt to have those funds) Rogers would not have had to sue for these assets:

    http://www.thestreet.com/markets/hedgefunds/10249291.html
     
    #16     Mar 24, 2008
  7. Segregation is not mandatory, you have to explicitly demand that your funds are segregated and be careful not to sign anything "opting out" of segregation.

    RIN ID: RIN 3038--AB67

    NOTICE: RULES
    ACTION: Commodity Exchange Act:
    DOCUMENT ACTION: Final rules.
    SUBJECT CATEGORY: Opting Out of Segregation

    EFFECTIVE DATES: June 19, 2001.

    DOCUMENT SUMMARY: Pursuant to section 111 of the Commodity Futures Modernization Act of 2000, the Commodity Futures Trading Commission (``Commission'' or ``CFTC'') is adopting a new rule allowing futures commission merchants (``FCM'') to offer certain customers the right to elect not to have funds, that are being carried by the FCM for purposes of margining, guaranteeing or securing the customers' trades on or through a registered derivatives transaction execution facility (``DTF''), separately accounted for and segregated. This is sometimes referred to as ``opting out'' of segregation. The CFTC is also adopting amendments to certain existing rules that would, among other things, govern the bankruptcy treatment of a customer that opts out of segregation.

    SUMMARY: Futures commission merchants; customers opting out of segregation,
     
    #17     Mar 24, 2008
  8. How can you be sure that your broker is segregating your funds ?
     
    #18     Mar 24, 2008
  9. Personally, I only wire money to segregated accounts.
     
    #19     Mar 24, 2008
  10. Segregated accounts work only in regulated markets (US securities, options, futures, bonds, etc).

    Non regulated markets like Spot Forex, venezuelan, iranian, russian bonds; must wait online with all other "general creditors", until the legal bankruptcy process ended.
     
    #20     Mar 24, 2008