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future firm protection
- Thread starter kelly55
- Start date
Quote from Pabst:
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.
Nothing in the court document, to which you linked, even suggests that Refco had authorization to transfer segregated customer funds to non-segregated accounts.
Your issue regarding the dates of the emails is irrelevant to this thread. Refco was obligated to keep segregated customer funds segregated, period. Neither Jim Rogers, nor any other customer, was required to send emails to the effect of "please keep my segregated funds segregated while you are going bankrupt', or 'please don't steal my money', etc.
How would you feel if you woke up one day, to find that your futures account had been drained? What if your broker then told you it was your own fault, because you failed to send an email asking them to keep your money protected in that account, and to avoid stealing it? Your response would be, "What the f___ are you talking about?" How would you feel if the broker then said you can't have your money back, because they just went bankrupt?
Jim Rogers is not my buddy and I am not defending his actions. I am actually criticizing his decision to trust Refco in the first place, so that I agree with the accusations in your court document that this was a failure to perform due diligence. EliteTrader members should learn from Rogers' mistake by not repeating it. They must conduct their own due diligence in selecting a futures broker.
It might also be helpful to remember that the document you offered was only a complaint, which means that it contains allegations with no supporting evidence, and that the supporting evidence, if any, will be provided and evaluated at trial. You shouldn't assume that something is true, just because it is alleged in a complaint.
Quote from Bearbelly:
I agree with JR that you should trade stocks when starting out if you have a choice. The PDT rules forces us poor people to trade futures if we are going to trade.
"forces" ?
13 (Tzameti)"
The plot is a young handyman called Sébastien (George Babluani, Géla's real life brother), decides to follow instructions intended to Godon (Philippe Passon), the owner of the house he'd been repairing the roof of, after Godon dies of drug overdose. But he couldn't imagine he'd be taken to a house in the woods where men gamble on men's lives, and he's forced to take part in a gruesome game of Russian Roulette where only one of the 13 men will survive.
are you in the same boat?
Quote from jimrockford:
Nothing in the court document, to which you linked, even suggests that Refco had authorization to transfer segregated customer funds to non-segregated accounts.
Your issue regarding the dates of the emails is irrelevant to this thread. Refco was obligated to keep segregated customer funds segregated, period. Neither Jim Rogers, nor any other customer, was required to send emails to the effect of "please keep my segregated funds segregated while you are going bankrupt', or 'please don't steal my money', etc.
How would you feel if you woke up one day, to find that your futures account had been drained? What if your broker then told you it was your own fault, because you failed to send an email asking them to keep your money protected in that account, and to avoid stealing it? Your response would be, "What the f___ are you talking about?" How would you feel if the broker then said you can't have your money back, because they just went bankrupt?
Jim Rogers is not my buddy and I am not defending his actions. I am actually criticizing his decision to trust Refco in the first place, so that I agree with the accusations in your court document that this was a failure to perform due diligence. EliteTrader members should learn from Rogers' mistake by not repeating it. They must conduct their own due diligence in selecting a futures broker.
It might also be helpful to remember that the document you offered was only a complaint, which means that it contains allegations with no supporting evidence, and that the supporting evidence, if any, will be provided and evaluated at trial. You shouldn't assume that something is true, just because it is alleged in a complaint.
" EliteTrader members should learn from Rogers' mistake by not repeating it. They must conduct their own due diligence in selecting a futures broker."
please explain in detail step by step what due diligence would consist of.
Quote from zdreg:
" EliteTrader members should learn from Rogers' mistake by not repeating it. They must conduct their own due diligence in selecting a futures broker."
please explain in detail step by step what due diligence would consist of.
Sorry,
I don't have time to do that for you, and I doubt such a process can even be made into a step-by-step algorithm substituting for the use of one's brain. I also don't believe you seriously want or expect me to do this for you, and that you are just having a little fun.
Quote from zdreg:
while an alogrithim may not work could you give a list of warning signals?
it sounds like future firms operate in the same enviroment as banks did before having mandatory insurance.
why don't future firms have private insurance?
I already gave (incomplete) lists of warning signals. More than once. Read my past posts on the subject.
Insurance is not available for every type of risk, because some risks, like the risks of losing funds in a futures broker bankruptcy, are so unpredictable, and so enormous, that no insurance company can afford to take them. Take, for example, the risk of nuclear war or nuclear accident. Check your homeowner's insurance policy, and you will find that damage caused by either is not covered. You can't purchase nuclear war insurance or nuclear accident insurance. If you could purchase it, do you really think you could count on it to pay your claim? Why can't you purchase insurance to protect against a global financial crisis? People once thought they could insure against stock market crashes, by dynamically hedging with put options - and the result was the great crash of 1987, in which this "portfolio insurance" strategy didn't work.
The ancient Roman poet, Juvenal, two thousand years ago, asked "Who will watch the watchers?" Ask yourself, "Who will insure the insurers?"
The purpose of futures trading is to shift risk from one party to another. Somebody, somewhere, actually has to take the risk. The buck must stop somewhere. The risk, that a particular futures market participant will have uncovered trading losses, is shared by all other customers participating in the same pool of customers operated by their futures broker. If a major market event, or some other misfortune, wipes out some of the customers of a futures broker, and also their broker's capital, then their non-defaulting fellow customers, in the same segregated pool of the same broker, are next in line to cover the losses, which are simply seized from the accounts of the fellow customers.
If you trade futures, then YOU YOURSELF ARE providing insurance. You are insuring counterparties to your broker's customers trades, against losses caused by other customers trading in the same segretated pool at the same broker. YOU ARE the insurer. Nobody is willing to take the other side of your offer to lay off your risk onto somebody else. Other exchange members, and the exchanges themselves, are also obligated to step in to cover losses, but only after the customer accounts are first totally drained.
Markets, as currently structured, do not provide any incentive for private insurers to provide what you seek. I believe Canadians do get some insurance coverage of their futures accounts, but this results from government mandates, not the free market.
The U.S. government provides very limited bank deposit insurance and SIPC insurance, because it is in the public interest to encourage the middle class to use the banking system and to invest in the stock market. Is it in the public interest to encourage the middle class to speculate in futures? If your answer is "yes", then do you think that you could sell your view to politicians and regulators? Do you think that Congress would pass a "No Speculator Left Behind Act?"