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Refco Account Security
- Thread starter Htrader
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Quote from Lon Eagle:
$1 billion does not go far when there is a run on the institution.
If you have any documentation as to whether or not there is a run being played out at REFCO LLC., or if a bank has pulled their credit line, please feel free to post specifics, and not just speculation.
Quote from Brandonf:
You would get your money back. They are members of the Exchange Clearing Corp, and all of the other FCMs would have to back them up on the losses. However, it could take some time, months even. If I had an account there I would be moving it because of the potential of having the money tied up for a long time, but not out of worry of losing it. In any case I think the prudent thing for anyone to do is to close the Refco accounts.
Brandon
has anyone had problems with trading in their accounts?
I have not heard of any news and the company keeps stating it has funds to carry it. I would trade as usual if I had an account with them.
w
Quote from Lon Eagle:
So you think large or small funds with cash with Refco LLC will care about the difference -of course not. These situations are all about confidence and liquidity. Anyone with half a brain will take their cash out, or pull their line, straight away until the situation is resolved.
As an example when Barings went under banks would not lend to any merchant bank, regardless of the fact they had Far Eastern, European or any trading operations. It is simply common sense.
$1 billion does not go far when there is a run on the institution.
The authorities have not frozen assets that we are aware of.
The company ran fine, cleared orders etc on a daily bases and carried on business as usual.
They still are, all over the world.
Large money will evaluate, in past experiences they buy or add on to limit exposure..just as in oil and gas...
The company is going is not going to go bankrupt based upon the news todate. Even if the situation gets worse it will be traded in about a (guess) about a 5dollar range for a while.
It sounds more like hennie / pennie that taking the time to evaluate and react...reaction with discernment?? very dangerous and usually ends up costing someone, us, money
w
Quote from nassau:
has anyone had problems with trading in their accounts?
I have not heard of any news and the company keeps stating it has funds to carry it. I would trade as usual if I had an account with them.
w
Then do so, you are not taking into account your risk very well though IMHO. IF refco is shut down, or goes under due to this out and out fraud, its possible that it would be some time before you saw your money. As members of the Exchange Clearing Corp they have good backing and you should not worry about losing your money, the other FCMs will take care of it, but it could be slow goings getting it back.
Quote from Brandonf:
Then do so, you are not taking into account your risk very well though IMHO. IF refco is shut down, or goes under due to this out and out fraud, its possible that it would be some time before you saw your money. As members of the Exchange Clearing Corp they have good backing and you should not worry about losing your money, the other FCMs will take care of it, but it could be slow goings getting it back.
Excuse me, but why would REFCO LLC., go under or shut down ( as you say ) due to Phillip Bennett's fraudulent loan that was in fact repaid to REFCO Holdings?
Your evaluation of risk based upon wild and undocumented speculation is wreckless at best.
Quote from Apex Capital:
Excuse me, but why would REFCO LLC., go under or shut down ( as you say ) due to Bennett's fraudulent loan that was in fact repaid?
Its called liquidity. Refco operates a business where every customer uses large amounts of margin to trade futures products. Thus it needs huge amounts of credit to do its business.
If the banks pull that credit, which they now have the right to do since refco is in violation of its bank covenants, then the business shuts down. Its not a choice.
Whether this will happen or not is unclear. But with the stock price at these levels, clearly the street thinks that its a distinct possibility.
Below is a direct quote from a WSJ article.
"Tom Foley, a credit analyst at Standard & Poor's Corp., said Refco's creditors have the right to ask for repayment on some $1.4 billion in bank debt and bonds issued last year in connection with a 2004 buyout, based on the reported financial misstatements. In the event of such a demand, Mr. Foley said, the banks would likely begin negotiations with the company, and the demand could prompt Refco to seek bankruptcy-law protection from creditors."
Quote from Brandonf:
Then do so, you are not taking into account your risk very well though IMHO. IF refco is shut down, or goes under due to this out and out fraud, its possible that it would be some time before you saw your money. As members of the Exchange Clearing Corp they have good backing and you should not worry about losing your money, the other FCMs will take care of it, but it could be slow goings getting it back.
i agree funds look to be safe, insurance, cash whatever..
that is why i said just trade and do what traders do ...make money...
w
My opinion .....mot banks have pulled their lines or cut the line to a level that will almost certainly make it unmanageable for Refco to do biz........not so much of a problem for the Futures side of the business as it is for the FX or Fixed Income where all the margin is provided by the banking lines. FX, if the banks follow proper Risk Mgmt and pull the lines almost immediately will start to slow dramatically. Think of it ....... all banks Risk dept focus on the financial and in place or in addition to that need the reassurance of the CEO or Chairman to put them at ease in taking the other side of the shops biz....the financial are tainted and the CEO is arrested .........how fast would you pull your $3bln line.....
Quote from Apex Capital:
Excuse me, but why would REFCO LLC., go under or shut down ( as you say ) due to Phillip Bennett's fraudulent loan that was in fact repaid?
Your evaluation of risk based upon wild and undocumented speculation is wreckless at best.
Without trust and confidence their balance sheet is NOTHING.
Apparently you have no problem trusting a company that has been cooking the books for YEARS, whose management has probably defrauded and ripped-off investors for hundreds of millions on an IPO (hence countless class action law suits pending). Not to mention that Refco's dubious ethics is pretty much common knowledge in the institutional and now retail markets.
If that's no problem for you I encourage you to buy their stock and do more business with them.
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