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highyields
Senior Contributor

Future Contracts, and MF Global

I was watching a local show out here in Nebraska and the guest on there said that When MF Global "went broke" 

The contracts in the future markets where froozen there, meaning they couldn't be traded, along with their margine money was froozen too?   So If I would have had a position in the market and used MF Global as my broker I couldn't have been trading those contracts???  

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8 Replies
farmersaw
Frequent Contributor

Re: Future Contracts, and MF Global

Do yourself a favor and youtube search for "Gerald Celente explodes"  you should be able to find a 3 part interview on there about the situation.  You may not believe what you see, but i can tell you it is not hyperbole.

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smokeyjay
Advisor

Re: Future Contracts, and MF Global

I have been in discussions with a state commodity group and the participants report there are a number of their group that have had their accounts frozen.  Only some have received some money back, one got 60% back because he was not actively trading on his account.  Most who were hedged and had margin money on account have not received any money, nor can they trade the account as it has been turned over to the bankruptcy courts along with MF's assets.  Unfortunately, the dissolution is now in the hands of the trustee, who has the power to decide whether to liquidate positions and pay out what's left, if anything is left.

 

I would encourage all to contact their congressmen and women and staff on the Hill to express your outrage that regulatory oversight has failed and that MF Global has failed in its fiduciary duty to maintain legally mandated separate accounts, segregating customer's money from corporate funds.  It's time to demand that CME be held accountable for not accessing its reserve account that reportedly has 7 billion to restore a customer's funds when a clearing house like MF Global fails in its fiduciary duty.  Rather than do the right thing, the CME decided to allow the accounts to be included in the bankruptcy filing.  One question that needs to be asked is "why?".   Does the CME actually have the money in reserve as they stated, or has that fund's integrity also been compromised, even to the point where the money has been diverted or simply disappeared as well?

 

It's time to call for enforcement of the rules that are on the books, to find out if the money was legally comingled (one small clause in the rules allows for specified comingling).  We do not need more laws.  We need enforcement of existing laws.

 

Finally, we need to address the issue of self-regulation and the role CME has played in this fiasco.  Apparently, self regulation is not working.  If it was, the money would not have been compromised and customers would have access to their own funds.

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k-289
Senior Advisor

Re: Future Contracts, and MF Global

Sure is making a lot of news on every business page---seems quite a bit of confidence shaken with these goings on---

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verbatime
Senior Contributor

Re: Future Contracts, and MF Global


@smokeyjay wrote:

I have been in discussions with a state commodity group and the participants report there are a number of their group that have had their accounts frozen.  Only some have received some money back, one got 60% back because he was not actively trading on his account.  Most who were hedged and had margin money on account have not received any money, nor can they trade the account as it has been turned over to the bankruptcy courts along with MF's assets.  Unfortunately, the dissolution is now in the hands of the trustee, who has the power to decide whether to liquidate positions and pay out what's left, if anything is left.

 

I would encourage all to contact their congressmen and women and staff on the Hill to express your outrage that regulatory oversight has failed and that MF Global has failed in its fiduciary duty to maintain legally mandated separate accounts, segregating customer's money from corporate funds.  It's time to demand that CME be held accountable for not accessing its reserve account that reportedly has 7 billion to restore a customer's funds when a clearing house like MF Global fails in its fiduciary duty.  Rather than do the right thing, the CME decided to allow the accounts to be included in the bankruptcy filing.  One question that needs to be asked is "why?".   Does the CME actually have the money in reserve as they stated, or has that fund's integrity also been compromised, even to the point where the money has been diverted or simply disappeared as well?

 

It's time to call for enforcement of the rules that are on the books, to find out if the money was legally comingled (one small clause in the rules allows for specified comingling).  We do not need more laws.  We need enforcement of existing laws.

 

Finally, we need to address the issue of self-regulation and the role CME has played in this fiasco.  Apparently, self regulation is not working.  If it was, the money would not have been compromised and customers would have access to their own funds.


 

Sorry but with this administration all appointees are political.  Corzine was largest private donor.  He understands presidency as like a dictatorship.  This is not an environment that promotes business.

 

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verbatime
Senior Contributor

Re: Future Contracts, and MF Global

Can you say corruption on a scale bigger than anyone has every seen.

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smokeyjay
Advisor

Re: Future Contracts, and MF Global

Political appointments by the administration has nothing to do with this issue.  Laws must be obeyed by all parties involved, whether or not they are appointed or elected.

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farmersaw
Frequent Contributor

Re: Future Contracts, and MF Global

 --Political appointments by the administration has nothing to do with this issue.--

 

I respectfully disagree.  In a perfect world your statement would hold water.  In the world we currently live in, i would say the exact opposite of your statement is reality.

 

I think the ONLY way for justice to at least partially get done, is for Obama to sense that there are potential political ramifications for his cozy relationship with Corzine.  If he believes Corzine may be a liability, Corzine will get his.  Plain and simple and sad that it has to work this way.

 

This whole scenario is so wild that i'm not even sure it would make a good Holloywood movie, as it wouldn't be seen as plausible if someone had written it down in a screenplay. 

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Nebrfarmr
Veteran Advisor

Re: Future Contracts, and MF Global

I had a contract for fertilizer with a local business, that was written this summer.  Said I could buy X tons of fertilizer at Y dollars per ton, to be paid on or before January 15th, with a deposit of Z.  Saturday after Thanksgiving, I opened a letter, saying they needed the balance in full by December 1st, if I wanted that price (about $65 a ton under current price).  I asked what is going on, and he said that the main office had the contracts 'called in' and we had to pay up, and take delivery (they have the tanks for that, thank goodness) or lose the contracts.

One rumor has it that the contracts were 'frozen' and they can't roll the hedge ahead any more,

the other rumor has it that the margin calls got raised to where the company couldn't afford to carry it any more.  All I know is, we got about 5 days notice to come up with the money.


On the brighter side, I won't have any income tax worries this year, and I got to sit in a comfy chair, with my hat in my hand, and talk real nice to my banker, why I need more $$$ until January, when I'll get paid for some corn I have contracted.

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