Sentinel Management - Asking to Halt Redemptions

M

MattF

Sentinel Management Group has asked permission from the CFTC to halt money market redemptions.

Sentinel's inability to meet significant redemption requests has exacerbated the liquidity concerns that have led many to believe a real credit crunch is forthcoming.

Letters have apparently been sent to investors.

Sentinel Management Group is an Illinois-based money market mutual fund for commodities.

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Some of these are sounding more like HYIP's...you can deposit no problem...but good luck withdrawing :p
 
Did Sentinel offer a MMKT fund with above market yield so that prospective investors might have been cautious about investing?
 
more actual story...

Aug. 14 (Bloomberg) -- Sentinel Management Group Inc., a Northbrook, Illinois-based money manager, has asked regulators for permission to halt investor withdrawals.

The firm 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 firm managed $1.6 billion as of last month, according to a filing with the U.S. Securities and Exchange Commission. Sentinel's investments include short-term commercial paper, investment-grade bonds and Treasury notes, according to its Web site.

``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.''

Eric Bloom, the firm's president and chief executive officer, didn't immediately return a call seeking comment. An assistant who declined to be named said the CFTC hasn't granted the firm's request yet.

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whoo boy...

WASHINGTON, Aug 14 (Reuters) - The U.S. Commodity Futures Trading Commission has no authority to grant Sentinel Management Group's request to halt client redemptions, an agency official said on Tuesday.

"The CFTC has no authority in this area," the CFTC official, who asked not to be identified, told Reuters. "This isn't something we do.

"We have no role in whether or not the company does this and whether the client accepts it," the official said.

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And they're off!
 
CNBC

Sentinel Management Group, an Illinois-based money-market mutual fund for commodities, has told clients it won't satisfy redemption requests from clients and won't accept new investments, according to CME Group, operator of the world's largest derivatives exchange.

Sentinel, which has about $1.6 billion in assets, asked the Commodity Futures Trading Commission for permission to halt redemptions in an attempt to avoid a forced liquidation. However, the regulator said Tuesday it does not have the authority to grant the request.

"We have no role in whether or not the company does this and whether the client accepts this," a CFTC official told Reuters. Sentinel is registered as a futures commission merchant with the CFTC.

According to CNBC's Steve Liesman, Sentinel told its clients it was seeking to halt redemptions until they can be honored in an orderly fashion.

In an Aug. 13 letter, Sentinel said it was worried it would not be able to meet any significant redemption requests.

"We had previously thought that the market would return to some semblance of order and that our clients would not join the panic. Unfortunately, this has not been the case," Sentinel said in a letter to clients, according to Liesman.

"We do not see an alternative and we don't believe it is anyone's best interest if a run on Sentinel took place and we were in a forced liquidation mode," Sentinel's management continued in the letter.
 
Quote from MattF:

. . . "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.''
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Those pesky "unnecessary losses," again for goshsakes. What's the problem? Don't they get it? Just borrow from the FED. It'll take the IOU. Heck, I've got some old poker IOUs I'm thinking of trying. Tomorrow morning, unless I miss my guess, they'll look pretty good next to the other paper gathered at the FED window.
 
Quote from Chood:

Those pesky "unnecessary losses," again for goshsakes. What's the problem? Don't they get it? Just borrow from the FED. It'll take the IOU. Heck, I've got some old poker IOUs I'm thinking of trying. Tomorrow morning, unless I miss my guess, they'll look pretty good next to the other paper gathered at the FED window.
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Im taking my Monopoly money.
 
Quote from Rahula:

Scary stuff - didn't firms try to do this in 87, just halt redemptions and unhook the phone?
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Yup. Forgot. Thanks for reminding me. They just didn't answer the phone.

Isn't that how you handle your problems?
 
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