Sentinel Management Files for Chapter 11 Bankruptcy
- Thread starter ASusilovic
- Start date
I'm sorry to hear your funds might be in trouble. But if you want extra insurance on large accounts, you can purchase a bond from some insurance agencies, so that firm risk is eliminated.
I think Mann Financial offers this type of insurance, especially if you have a need to trade at a bucket shop type place. In this climate its hard to differentiate what firms have solid risk profile and which ones don't, I will be closing out some accounts, secondary to possible insolvency risks in the future. Who would have thought Refco would have gone under.
I think Mann Financial offers this type of insurance, especially if you have a need to trade at a bucket shop type place. In this climate its hard to differentiate what firms have solid risk profile and which ones don't, I will be closing out some accounts, secondary to possible insolvency risks in the future. Who would have thought Refco would have gone under.
I believe only if you designate account in managed futures type situation.
But cash getting funneled into money markets is a risk that would not have been a risk in the past. I would check where your firms park cash in.
My best guess is you may be out some money. Hopefully it'll only be half your account. I wouldn't rule out a bailout but as long as the CME is unscathed I can't say whose interests will coincide with yours.
Segregated accounts aren't applicable to this issue. All that legal stuff becomes moot anyway's as soon as the money's gone and the principal's are unable to replace it. Blood from a rock......
If Sentinel's customers weren't in urgent need of cash themselves this wouldn't be an issue.
The securities Sentinel held weren't all in default they were just trading at crappy prices. Presumably down the road most this paper will be redeemed at par.
However clearing firms have seen their customer accounts suffer massive losses the past month. Shit, how many Velocity traders do you think blew up this week? I bet millions worth. Now Velocity needs cash out of Sentinel to margin existing positions. Sentinel say's no can do which starts a run of sorts. Just like a 1930's bank.
The securities Sentinel held weren't all in default they were just trading at crappy prices. Presumably down the road most this paper will be redeemed at par.
However clearing firms have seen their customer accounts suffer massive losses the past month. Shit, how many Velocity traders do you think blew up this week? I bet millions worth. Now Velocity needs cash out of Sentinel to margin existing positions. Sentinel say's no can do which starts a run of sorts. Just like a 1930's bank.
a possible check, could be this at your firm.
tell the firm to open another account at the same firm. Take hedged position, meaning if your long 100 sp futures in account A, short 100 sp futures in account B.
Or max out margin/overnight requirements, in both accounts with a hedge. It forces the firm to move your cash into derivatives that have more counterparty insurance, and out of cash/money markets.
If your firm gives you trouble in doing this, then this performance test, has stressed their financial structure and they failed the test. If price oscillation creates margin needs just offset it from the other account day to day till the storm passes.
tell the firm to open another account at the same firm. Take hedged position, meaning if your long 100 sp futures in account A, short 100 sp futures in account B.
Or max out margin/overnight requirements, in both accounts with a hedge. It forces the firm to move your cash into derivatives that have more counterparty insurance, and out of cash/money markets.
If your firm gives you trouble in doing this, then this performance test, has stressed their financial structure and they failed the test. If price oscillation creates margin needs just offset it from the other account day to day till the storm passes.
All true but it's closing the door behind the horse. Firm's that are in Sentinel like accounts are revaluating and those who're already bust....well no remedy.
Bottom line: Any firm can go broke.
When one trades through Morgan they're not trading through the Bank they're trading through subsidiary Securities Inc. And if Inc goes blink because of the biggest trading loss in history then your account is up the creek. I betya even Goldman, Lehman and Bear have seen some folks pull money in the past few weeks. How big was Hutton? Or Du Pont? Or Goodbody? Or Barings?
a possible check, could be this at your firm.
tell the firm to open another account at the same firm. Take hedged position, meaning if your long 100 sp futures in account A, short 100 sp futures in account B.
Or max out margin/overnight requirements, in both accounts with a hedge. It forces the firm to move your cash into derivatives that have more counterparty insurance, and out of cash/money markets.
If your firm gives you trouble in doing this, then this performance test, has stressed their financial structure and they failed the test. If price oscillation creates margin needs just offset it from the other account day to day till the storm passes. [/QUOTE]
Bottom line: Any firm can go broke.
When one trades through Morgan they're not trading through the Bank they're trading through subsidiary Securities Inc. And if Inc goes blink because of the biggest trading loss in history then your account is up the creek. I betya even Goldman, Lehman and Bear have seen some folks pull money in the past few weeks. How big was Hutton? Or Du Pont? Or Goodbody? Or Barings?
a possible check, could be this at your firm.
tell the firm to open another account at the same firm. Take hedged position, meaning if your long 100 sp futures in account A, short 100 sp futures in account B.
Or max out margin/overnight requirements, in both accounts with a hedge. It forces the firm to move your cash into derivatives that have more counterparty insurance, and out of cash/money markets.
If your firm gives you trouble in doing this, then this performance test, has stressed their financial structure and they failed the test. If price oscillation creates margin needs just offset it from the other account day to day till the storm passes. [/QUOTE]
According to the 6/30/07 FCM Financial Data available here, Velocity had (on 6/30/07) 19M+ segregated customer funds.
If those numbers have remained similar since that time, Sentinel held about 50% of that.
Velocity certainly is not what I would consider flush with cash, but I think Pabst is overboard writing an epitaph for Velocity and Velocity customers.
Relax... watch the path of Dean... Houston is not a certain target.
Osorico
EDIT: I do agree there is a fly in the ointment. Im reminded of an old WS adage I was discussing just yesterday... If you think the bottom is in, it probably isn't. If you know the bottom is in, you're late.
If those numbers have remained similar since that time, Sentinel held about 50% of that.
Velocity certainly is not what I would consider flush with cash, but I think Pabst is overboard writing an epitaph for Velocity and Velocity customers.
Relax... watch the path of Dean... Houston is not a certain target.
Osorico
EDIT: I do agree there is a fly in the ointment. Im reminded of an old WS adage I was discussing just yesterday... If you think the bottom is in, it probably isn't. If you know the bottom is in, you're late.
Quote from ASusilovic:
Sentinel Management Group Inc., a cash-management firm which froze client withdrawals three days ago, filed for bankruptcy after a judge sought to block it from selling assets to hedge fund company Citadel Investment Group LLC.
Sentinel, a Northbrook, Illinois-based firm that oversees $1.6 billion, stopped the withdrawals Aug. 14, causing brokers Farr Financial Inc. and Velocity Futures LP to sue.
Farr claimed the freeze blocked access to client funds. Velocity, joining the suit today, sought to keep its own clients' assets from being sold to Citadel because the assets are being sold at a 15 percent discount. The assets may have already been sold, lawyers for both sides told U.S. District Judge Ronald Guzman today in Chicago federal court.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a7CjyeOgWtxs&refer=home
Opppsss...no deal with Citadel...
Does this mean the market is gonna tank Monday?