Will Some Good Come out of MF Madness?

A piece snuck up on Reuters last week outlining some of the points being held at the CFTC roundtable on how to better protect customer funds.

There are some good points here. The first one (make MF Global customers whole) was floated by Attain CEO Jeff Malec shortly after the MF bankruptcy and repeated on a near daily basis on the phone. The industry as a whole needs to step up and restore MF clients funds in the name of saving the industry.  Let them book a credit due from the MF estate for the amount they pay into the “make them whole fund,” and upon any recovery it goes to the firms who made the clients whole. Shoring up confidence in the sanctity of segregated accounts is crucial for the future of the industry, and it’s the right thing to do.

In addition, we wholly support a rule saying heads of futures firms holding client assets should be criminally and personally liable for any missing funds. The buck has to stop with the top executives; the “Corzine Defense” of claiming ignorance in the face of large transfers of customer funds is no excuse.

We continue to believe the best way to insure no MF madness happens again is to make any creditor claims in the case of any firm dealing with customer assets going bankrupt subservient to any customer claims. That is, no lines of credit, bonds, employee salaries, etc., will be paid out until and unless customers are made whole. That would create a very large invisible hand which would make darn sure no shenanigans were going on – for fear of being last in line to get their money back.

3 comments

  1. […] Will Some Good Come out of MF Madness? (managed-futures-blog.attaincapital.com) […]

  2. […] in number, but they are definitely large when it comes to industry influence. … Retrieve DocBe sure to visit The Friendly UniverseMore Glee News? Hedge fund Managers' Processes Are Maturing: …/05/Aprilsecuredownload1.jpg" […]

  3. In addition to your ideas, legal experts will not stop even if your suggestions were implemented.
    1. Make it also a criminal offense for a creditor to attempt to collect prior to customers being made whole. ( Insert it in baking laws, criminal laws, and bankruptcy law )
    2. Make all creditor contracts null and void if attempting to collect in bankruptcy prior to customers being made whole.
    3. All assets should remain in the name of the customer, and creditors should be equally responsible to maintain the trust relationship. Mere possession by a creditor should not relinquish title to the asset by the customer.
    4. The doctrine of “contra-proferentum” should be written in all commodity agreements. Where the contract is null and void if the FCM or broker insert any condition allowing the customer to opt out of any law.

    Otherwise, lawyers will claim that the creditors’ claims are not a nullity; and there is nothing to stop the creditor from asserting a claim.

Write a Comment

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.

logo