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Dither, MF Global Trustee Giddens
Reposted from EconomicPolicyJournal.com
Yesterday, MF Global Inc. liquidation trustee James W. Giddens, filed an application to the bankruptcy court to establish claims procedures for MF Global brokerage customers who have had their cash frozen for over two weeks now, as well as the broker's general creditors. While this would seem a step in the right direction, the proposal falls far short of what could be done to provide relief for MF Global customers, while imposing further unnecessary delays. The proposal was filed with a motion for an expedited hearing on the matter to be conducted the very next day (today, in fact, at 3:30 pm), which was granted minutes later by the bankruptcy judge, according to the docket.
Per the proposal, claim forms would be mailed to MF Global customer on November 28 and be posted on the trustee's website, whereafter customers would have two months, extended up to six months in some cases, to file claims. Other documents filed suggest there would be a 60% payout, but the trustee's proposal does not outline any specific timeline or payout percentage. [Update: In a separate motion, the Trustee has requested expedited payment of 60% of customer funds.] Indeed, his proposal says interim distributions would be made "if possible". This is wholely unacceptable. Based on current estimated missing funds of $600 million, or approximately 12% of segregated account assets, the assumed 60% payout is well below any reasonable threshold, especially considering the CME Group has pledged $250 million to backstop any overpayment by the trustee.
Trustee Giddens cited the "relatively poor state of the Debtor’s books and records", as we noted yesterday. However, as the below press release of the Commodity Customer Coalition points out, this is irrelevant to the delay of an immediate payout. Per futures industry regulations, each futures customer receives a daily statement of cash and open positions, marked to market. Such statements were produced even on October 31, 2011, the day of the MF Global bankruptcy filing. Many customers continued to receive electronic statements for days afterwards. Thus, what should be in the futures customers' accounts is known to the penny. What assets actually back those statements up is another matter. But, again, estimated losses support a much higher initial payout than 60%, especially with the CME's backstop.
In the meantime, trustee Giddens will continue to charge $891 per hour against MF Global assets (in addition to research fees of 1% for misdirected wires), and SIPC, inexperienced with futures broker liquidations (and still managing the Lehman liquidation three years and counting), is all the customers have to represent their interests. It is critical that MF Global customers obtain proper representation on what might currently be a compromised creditor committee.
Full press release of the Commodity Customer Coalition follows.
Commodity Customer Coalition
190 South La Salle Street, Suite 3000
Chicago, IL 60603
FOR IMMEDIATE RELEASE
312-933-6564
November 16, 2011
CONTACT: John L. Roe (jroe@btrtrading.com)
Commodity Customer Coalition to Object to SIPC Trustee’s Claims Process for MF Global Bankruptcy, Propose Faster Alternative Claims Process
In response to the SIPC Trustee’s expedited application for an order from the court to put both securities and commodities customers of MF Global through the same claims process, the Commodity Customer Coalition (“CCC”) is filing an emergency objection to that application and proposing a faster, more efficient claims process to immediately release a majority of customer funds. The CCC issued the following statement:
The Commodity Customer Coalition applauds the Trustee’s recent motion to release 60% of assets held in cash on October 31, 2011. However, that simply isn’t good enough. This only represents a very small portion of the total assets frozen in the bankruptcy. Additionally, the Trustee has proposed a snail mail approach to collecting claims. He says they cannot use the books of MF Global to verify customer claims, but his process will only result in customers mailing him statements based on those books and it will do so over a period of months. Our proposal will streamline this process with a more commonsense approach, affirm the primacy of customer property over the claims of creditors and return funds to their rightful owners in a matter of days, not months._The basis for the Trustee’s proposal is that he cannot give us an accurate accounting of the shortfall in customer funds. But MF Global’s estate has $1.2 billion in excess equity and the CME has thrown him a life line of $250 million if he sends home too much money. MF Global claimed under oath that only $600 million in funds is missing. So the shortfall in funds is irrelevant; the Trustee has 250% over the shortfall. That money is supposedly accounted for on a daily basis to the NFA, CFTC and MF’s DSRO, which was the CME. The Trustee has had over two weeks to sort through this and get clients their money. It’s time to truly expedite this process and make customers whole.
Mr. James Koutoulas, Esq. will appear in person tomorrow to argue the CCC motion before the court. He will make himself available to the press immediately following the hearing on the steps of the courthouse.
###
The Commodity Customer Coalition now represents over 7,000 former MF Global customers whose funds have been frozen by the SIPC Trustee. For more information, or to schedule interviews, please contact John L. Roe
(jroe@btrtrading.com, 312-933-6564).
--End press release--
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MF Global Explained:
http://www.youtube.com/watch?v=jLt05sN7vK0
The investigation should take a hard look on how and why MFG got where it did (connections DUH!) and who shielded it.
Regulations and regulators are worthless when someone sets his/her mind do do something.
The CME and the CFTC should be on the hook for everything that happened under their watch.
And they wonder why the "small investor" is cynical.
Based on past Giddens legal behavior and standard law practices, cut him a check for whatever is left and dispense with the court circus. He is getting about a $1K/hr, with 6 support lawyers handling different areas and paralegals you are spending $5K an hour. Amazingly, they are all "billing" 100 hours a week for just this case. If you think how much you really work at work, means they are at work about 300 hours a week to bill 100 hours. So they are going to bill $500K/wk and the entire bankruptsy liquidation will take, according to my calculations (without using any numbers), exactly the amount of time until the money runs out, without actually paying anything out..
Has he been questioned at all, appeared, no Press/Media/Cameras waiting outside to see him? Seriously, where is he? Did he "hit the mattresses" ??? Unbelievable...another example of the Power of the MSMedia, obviously he has an Official approval of being allowed to remain a non-topic...$600 million, whatever it is, doesn't just vanish from an account, the Paper Trail has to be there
Thank Sandusky for the memory-hole.
"trading ceases up at the CME and the oil price suppression scheme is annihilated. Thank you playing...have a nice day." move along people...move along.
And the doors slam shut on the empty Comex vaults. TADA!
They should 100% make each customer whole. Without that, why would anyone trade futures again - the sizeable accounts are usually hedgers/commercials. Why even bother to hedge if you can lose 40% of your money - odds are super high that you would not lose 40% to "market movements" between time A and time B, when the contract expires. Could it happen - sure. But that is like owning 100mil of SP500 stocks and saying between now and Dec expiration the market will drop down to 600. Or as a corn farmer you sell futures to lock in - is the price of corn really gonna drop 40% in a few months? No, but you could lose 40% of your money overnight through no fault of your own.
This same scenario can happen with ANY firm, since they are allowed to do whatever they want irrespective of laws and regulations I guess. A firm could be 100% above board and then in 1 or 2 days decide to shift all the money and make a bet on Silver, lose 50% of the money and there is nothing you can do about it. Your money is their money.
The only way around this is to not let futures firm be custodians of money as well - they can trade and transact but cannot actually hold customer funds NOR own an entity that does. Everyone will need a DVP type arrangement to safeguard stealing and comingling.
Accounts up to $250,000 are insured by SIPC, but yes, this is a completely retarded cluster-fuck. If it is not resolved soon, the markets will freeze up. Not a good time to enter new positions.
Unfortunately, that $250k protection only applies to securities accounts, not futures accounts, which make up about 97% of all MFG accounts. Which begs the question, why is SIPC leading the liquidation?
God knows what will happen here, but I think the $250k applies to cash balances in any brokerage account. The futures or futures options positions belong to the customer, and must be unwound through a new, solvent (te, he) broker.
You are quite right that losses on futures positions, or of the whole damn position due to fraud, negligence, acts of the Squid, whatever, are not covered by any insurance. Gawdhelpus.
They've got experience at hiding the bodies, and other evidence destruction?
It is just a case of a bad cellular connection ... you know, "Ship the documents to the Feds" sure sounds a lot like "Rip the documents to shreds" ...
Regards,
Cooter
A brief WSJ online article said "they are having trouble determining which numbers are real."
Where in the world is Jon Corzine, and why isn't he at Rikers Island?
He's in hiding until his appointment to some high post in this, or the 2nd, Obama administration.
Quite an orchestrated theft; next will be retirement accounts; pay the frickin penalty and buy physical before it's too late.
I read that Celente got his ass rubbed raw by MFG, stole his gold an shit. Is this true? Why didn't he predict that, I wonder?
Celete had a fully funded Dec position and planned to take delivery. They moved his position to another broker, but didn't move the funding (only the minimum for the position was moved). So he got a margin call. He said the missing money "was six figures".
There was a ZH post earlier that had the RT youtube of his four minute rant. Definately worth watching.
This is public looting, the pretense of fraud is just tossed aside anymore. And nothing is done by the authorities.
Regards,
Cooter
He said he was planning to take physical delivery in December.
I hear most Lind Waldock retail customers have up-armored Humvees for that reason.
Any with .50 cals?
Corzine should be hung by his nuts from a street lamp.
problem: he'll like that
WTF? The system is rotten to the core. Where can you put your $? The banks are rotten, the brokers are rotten, the government is caving in like an over ripe melon. All that is left is the four metals Gold, Silver, Brass and Lead.
An employee from MFs credit risk division is suing MF ie. whats left of shareholders money for 60 days severance pay .
"...In the meantime, trustee Giddens will continue to charge $891 per hour..."
EOM
Which ensures that this will be a LONG drawn out process.............