future firm protection

Quote from Pabst:

Those losses did not occur to customers who's funds were held in SEGREGATED futures accounts! Period.
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Wrong on two counts.

First, even if your funds are held in a SEGREGATED futures account, you might lose the entire account if your broker goes bankrupt. I am tired of explaining this over and over again on ET. Please research my past postings on this topic, or search websites of the CME or CFTC or NFA.

Second, the roughly one billion dollars lost by futures traders at Refco, LLC, were all deposited into SEGREGATED futures accounts. Refco then transferred those funds out of the SEGREGATED futures accounts and into accounts that were not SEGREGATED. Refco had a long history of making such transfers without customer authorization, as a source of short-term loans to itself, which it repaid and then re-borrowed on an almost daily basis. Refo had already been repeatedly fined for doing this on many occasions over a period of years. This time, Refco transferred funds out of the SEGREGATED accounts just as it was in the process of going bankrupt and needed a source of emergency financing to cover its debts. Refco went bankrupt immediately after transferring the funds, so that Refco was unable to pay those funds back to the SEGREGATED customer accounts from which they had been "borrowed". The Jim Rogers funds claimed, in court papers, that they had specifically instructed Refco not to make these transfers, before those transfers were made, but that the transfers were made anyway.

Your futures broker is not supposed to transfer your SEGREGATED funds into non-SEGREGATED accounts, since this is illegal, but seriously folks, sometimes people in the financial industry do not exactly dot every i and cross every t when it comes to obeying the law. Your funds are held in a SEGREGATED futures account, but only until your broker decides to transfer them to a non-segregated account, or until your broker goes bankrupt, in which case you can lose your entire account even if they are held in a SEGREGATED account.

SEGREGATED futures trading accounts are called SEGREGATED because they are SEGREGATED from the broker's assets and debts. But they are not SEGREGATED from the accounts of other customers. The typical futures account is pooled with those of most other customers in the firm, with the result being one huge SEGREGATED account. If the other customers in your SEGREGATED pooled account experience large trading losses which they are unable to cover, or if the broker embezzles funds from the SEGREGATED pool, then your own account assets can be partially tapped or completely wiped out in order to cover the SEGREGATED pool's loss.

Please do some research. I am so tired of explaining this over and over and over again.
 
And I repeat my question. Whats the alternative? If you want to trade futures you must have a broker. Refcos happen. Flying is the safest form of travel but crashes happen. All you can do is go with a well established, reputable, broker, and take your chances, imho.
 
Quote from Bearbelly:

And I repeat my question. Whats the alternative? If you want to trade futures you must have a broker. Refcos happen. Flying is the safest form of travel but crashes happen. All you can do is go with a well established, reputable, broker, and take your chances, imho.
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And I repeat my answer. Do some research. Use your brain. Choose your broker carefully and wisely. The fact that a broker is large and well established is not enough to protect you. Refco was the largest and it was well established. If you had, for example, researched its regulatory history on the NFA's website, long before its bankruptcy, you would have seen that Refco was also corrupt and untrustworthy. If you spend the time to do research, you will learn a lot more about how to select a broker. You are assuming that since you don't know anything about the subject, that you won't learn anything from making an effort. If you do make the effort to learn, then you will discover the value of learning. If you just deliberately stay ignorant, then all you can do is just sit around saying it is hopeless and that there is nothing that can be done to minimize the risk.

"In the fields of observation, chance favors only those minds which are prepared." -Louis Pasteur, Dec. 7, 1854.
 
Quote from kelly55:

But you never answered the correct answer for us.
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I advised you to do some research and use your brain, to come up with correct answers on your own. Why don't you read my previous postings on this topic, going back to the fall of 2005, instead of asking me to repeat myself? Those postings won't give you "the correct answer" either, but they will be helpful. Why don't you check with the CFTC? the NFA? the CME? the CBOT? search their websites? call some brokers and ask them some questions? If you want to be successful at trading, you need to be able to take the initiative to seek answers. You won't succeed if you need to have everything spoonfed to you. I think Interactive Brokers is one of the safest futures brokers, but IB is not appropriate for traders who need to be spoonfed.

If you are new to trading, you shouldn't even consider trading futures. You should first learn how to trade stocks, because the risks from your own trading, and also the risks from possible broker bankruptcy, are much smaller. Most people will never be able to trade profitably, but if you try learning with stocks, you take less risk on each trade than with futures, so that you will lose more slowly, and will therefore have better chances of learning to trade profitably, before all your money has been lost.
 
I never made ANY claims as to the safety or lack there of concerning funds held in the segregated account of a futures FCM. Without doubt there is associated risk. I can think of three instances when clearing member firms of U.S. exchanges have bitten the dust so to speak. In each example customer funds were imperiled.

In Refco's case you are assuming based on court filings by Jim Roger's etal that funds were "swept" from segregated accounts. However you have ZERO knowledge as to whether Roger's allegations are indeed factual. There's many stories floating around that the relationship between Rogers and Refco extended BEYOND Refco merely being Roger's broker. In other words there's a clear legal distinction between one being a depositor vs. being a lender. It strongly appears that Roger's was receiving an above market rate of return on funds because they weren't being segregated from the Firm's operating account. When the shit hit the fan Roger's desperately attempted to have the funds segregated but failed to do so in timely fashion.

After the dust settles it may be in this instance that you are correct. However without full balanced testimony and without a forensic examination of Roger's and Refco's records, it's impossible to make a distinction as to culpability. Therefore the statements that you repeatedly purport as "fact" are nothing more than mere speculation.
Quote from jimrockford:

Wrong on two counts.

First, even if your funds are held in a SEGREGATED futures account, you might lose the entire account if your broker goes bankrupt. I am tired of explaining this over and over again on ET. Please research my past postings on this topic, or search websites of the CME or CFTC or NFA.

Second, the roughly one billion dollars lost by futures traders at Refco, LLC, were all deposited into SEGREGATED futures accounts. Refco then transferred those funds out of the SEGREGATED futures accounts and into accounts that were not SEGREGATED. Refco had a long history of making such transfers without customer authorization, as a source of short-term loans to itself, which it repaid and then re-borrowed on an almost daily basis. Refo had already been repeatedly fined for doing this on many occasions over a period of years. This time, Refco transferred funds out of the SEGREGATED accounts just as it was in the process of going bankrupt and needed a source of emergency financing to cover its debts. Refco went bankrupt immediately after transferring the funds, so that Refco was unable to pay those funds back to the SEGREGATED customer accounts from which they had been "borrowed". The Jim Rogers funds claimed, in court papers, that they had specifically instructed Refco not to make these transfers, before those transfers were made, but that the transfers were made anyway.

Your futures broker is not supposed to transfer your SEGREGATED funds into non-SEGREGATED accounts, since this is illegal, but seriously folks, sometimes people in the financial industry do not exactly dot every i and cross every t when it comes to obeying the law. Your funds are held in a SEGREGATED futures account, but only until your broker decides to transfer them to a non-segregated account, or until your broker goes bankrupt, in which case you can lose your entire account even if they are held in a SEGREGATED account.

SEGREGATED futures trading accounts are called SEGREGATED because they are SEGREGATED from the broker's assets and debts. But they are not SEGREGATED from the accounts of other customers. The typical futures account is pooled with those of most other customers in the firm, with the result being one huge SEGREGATED account. If the other customers in your SEGREGATED pooled account experience large trading losses which they are unable to cover, or if the broker embezzles funds from the SEGREGATED pool, then your own account assets can be partially tapped or completely wiped out in order to cover the SEGREGATED pool's loss.

Please do some research. I am so tired of explaining this over and over and over again.
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Quote from Pabst:

I never made ANY claims as to the safety or lack there of concerning funds held in the segregated account of a futures FCM. Without doubt there is associated risk. I can think of three instances when clearing member firms of U.S. exchanges have bitten the dust so to speak. In each example customer funds were imperiled.

In Refco's case you are assuming based on court filings by Jim Roger's etal that funds were "swept" from segregated accounts. However you have ZERO knowledge as to whether Roger's allegations are indeed factual. There's many stories floating around that the relationship between Rogers and Refco extended BEYOND Refco merely being Roger's broker. In other words there's a clear legal distinction between one being a depositor vs. being a lender. It strongly appears that Roger's was receiving an above market rate of return on funds because they weren't being segregated from the Firm's operating account. When the shit hit the fan Roger's desperately attempted to have the funds segregated but failed to do so in timely fashion.

After the dust settles it may be in this instance that you are correct. However without full balanced testimony and without a forensic examination of Roger's and Refco's records, it's impossible to make a distinction as to culpability. Therefore the statements that you repeatedly purport as "fact" are nothing more than mere speculation.
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Refco admitted, contrary to your assertions, that Refco did transfer those funds from segregated to non-segregated accounts, thus causing the futures trading customers to lose roughly a billion dollars in the Refco bankrupty. So you were wrong to say that I was merely assuming this to be a fact, when in reality, it is an undisputed fact that everybody involved, including Refco, publicly agreed is true. You wrote I have ZERO knowledge, but really it is you who has either ZERO knowledge, or at best, inaccurate knowledge.

Everything I said, in the text you quoted from me, was 100% established fact, without any assumptions on my part. It is your own version which contradicts the facts and makes unsupported assumptions.

It is undisputed that Refco transferred the segregated customer funds to non-segregated accounts, just as Refco was going bankrupt. The only dispute arises from Refco's claim that Jim Rogers, and the other losing customers, authorized Refco to make the transfers. I think that a reasonably well informed person could arrive at an opinion that Refco did not have authorization to make the transfers, and that Refco was lying. Refco, for example, had a long history of making such transfers without customer authorization, as repeatedly proven by CFTC investigations going back to 1994. Refco also has a long and well established history of lying. Jim Rogers, for another example, also had a long history of not being a complete moron, and of not being a liar, which throws further doubt on the Refco story that he and others "loaned" the money to Refco by permitting it to be transferred out of the segregated accounts.

We don't know with absolute certainty, exactly what happened, but anybody trading futures, especially with other people's money, has a responsibility to think for themselves and to form opinions, without waiting for the courts to tell them how to think.
 
I suggest you examine this difficult to find court document before you jump to any conclusions. Your buddy Rogers appears to have serious conflict of interest issues concerning Beelands relationship and pending sale to Refco.

http://web.tampabay.rr.com/bbtrust/Simek_v_Beeland.pdf

Further you and the press keep harping about these e-mails between Beeland and Refco where Refco "assures" Beeland the money is in fact segregated ect. The DATES of correspondence are immediately AFTER the Bennett revelations became public! Thus I can find no "record" of Rogers etal expressing written concern about the condition or placement of funds until the mess was already unraveling.

Quote from jimrockford:

Refco admitted, contrary to your assertions, that Refco did transfer those funds from segregated to non-segregated accounts, thus causing the futures trading customers to lose roughly a billion dollars in the Refco bankrupty. So you were wrong to say that I was merely assuming this to be a fact, when in reality, it is an undisputed fact that everybody involved, including Refco, publicly agreed is true. You wrote I have ZERO knowledge, but really it is you who has either ZERO knowledge, or at best, inaccurate knowledge.

Everything I said, in the text you quoted from me, was 100% established fact, without any assumptions on my part. It is your own version which contradicts the facts and makes unsupported assumptions.

It is undisputed that Refco transferred the segregated customer funds to non-segregated accounts, just as Refco was going bankrupt. The only dispute arises from Refco's claim that Jim Rogers, and the other losing customers, authorized Refco to make the transfers. I think that a reasonably well informed person could arrive at an opinion that Refco did not have authorization to make the transfers, and that Refco was lying. Refco, for example, had a long history of making such transfers without customer authorization, as repeatedly proven by CFTC investigations going back to 1994. Refco also has a long and well established history of lying. Jim Rogers, for another example, also had a long history of not being a complete moron, and of not being a liar, which throws further doubt on the Refco story that he and others "loaned" the money to Refco by permitting it to be transferred out of the segregated accounts.

We don't know with absolute certainty, exactly what happened, but anybody trading futures, especially with other people's money, has a responsibility to think for themselves and to form opinions, without waiting for the courts to tell them how to think.
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