"The Entire System Has Been Utterly Destroyed By The MF Global Collapse" - Presenting The First MF Global Casualty

Tyler Durden's picture

Presented without comment, merely to confirm that the market as we know it, no longer exists.

BCM Has Ceased Operations (source)
Posted by Ann Barnhardt - November 17, AD 2011 10:27 AM MST

Dear Clients, Industry Colleagues and Friends of Barnhardt Capital Management,

It is with regret and unflinching moral certainty that I announce that Barnhardt Capital Management has ceased operations. After six years of operating as an independent introducing brokerage, and eight years of employment as a broker before that, I found myself, this morning, for the first time since I was 20 years old, watching the futures and options markets open not as a participant, but as a mere spectator.

The reason for my decision to pull the plug was excruciatingly simple: I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not. And this goes not just for my clients, but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. Given this sad reality, I could not in good conscience take one more step as a commodity broker, soliciting trades that I knew were unsafe or holding funds that I knew to be in jeopardy.

The futures markets are very highly-leveraged and thus require an exceptionally firm base upon which to function. That base was the sacrosanct segregation of customer funds from clearing firm capital, with additional emergency financial backing provided by the exchanges themselves. Up until a few weeks ago, that base existed, and had worked flawlessly. Firms came and went, with some imploding in spectacular fashion. Whenever a firm failure happened, the customer funds were intact and the exchanges would step in to backstop everything and keep customers 100% liquid – even as their clearing firm collapsed and was quickly replaced by another firm within the system.

Everything changed just a few short weeks ago. A firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let’s not sugar-coat this or make this crime seem “complex” and “abstract” by drowning ourselves in six-dollar words and uber-technical jargon. Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. This is unfathomable. The risk exposure precedent that has been set is completely intolerable and has destroyed the entire industry paradigm. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian Roulette.

I have learned over the last week that MF Global is almost certainly the mere tip of the iceberg. There is massive industry-wide exposure to European sovereign junk debt. While other firms may not be as heavily leveraged as Corzine had MFG leveraged, and it is now thought that MFG’s leverage may have been in excess of 100:1, they are still suicidally leveraged and will likely stand massive, unmeetable collateral calls in the coming days and weeks as Europe inevitably collapses. I now suspect that the reason the Chicago Mercantile Exchange did not immediately step in to backstop the MFG implosion was because they knew and know that if they backstopped MFG, they would then be expected to backstop all of the other firms in the system when the failures began to cascade – and there simply isn’t that much money in the entire system. In short, the problem is a SYSTEMIC problem, not merely isolated to one firm.

Perhaps the most ominous dynamic that I have yet heard of in regards to this mess is that of the risk of potential CLAWBACK actions. For those who do not know, “clawback” is the process by which a bankruptcy trustee is legally permitted to re-seize assets that left a bankrupt entity in the time period immediately preceding the entity’s collapse. So, using the MF Global customers as an example, any funds that were withdrawn from MFG accounts in the run-up to the collapse, either because of suspicions the customer may have had about MFG from, say, watching the company’s bond yields rise sharply, or from purely organic day-to-day withdrawls, the bankruptcy trustee COULD initiate action to “clawback” those funds. As a hedge broker, this makes my blood run cold. Generally, as the markets move in favor of a hedge position and equity builds in a client’s account, that excess equity is sent back to the customer who then uses that equity to offset cash market transactions OR to pay down a revolving line of credit. Even the possibility that a customer could be penalized and additionally raped AGAIN via a clawback action after already having their customer funds stolen is simply villainous. While there has been no open indication of clawback actions being initiated by the MF Global trustee, I have been told that it is a possibility.

And so, to the very unpleasant crux of the matter. The futures and options markets are no longer viable. It is my recommendation that ALL customers withdraw from all of the markets as soon as possible so that they have the best chance of protecting themselves and their equity. The system is no longer functioning with integrity and is suicidally risk-laden. The rule of law is non-existent, instead replaced with godless, criminal political cronyism.

Remember, derivatives contracts are NOT NECESSARY in the commodities markets. The cash commodity itself is the underlying reality and is not dependent on the futures or options markets. Many people seem to have gotten that backwards over the past decades. From Abel the animal husbandman up until the year 1964, there were no cattle futures contracts at all, and no options contracts until 1984, and yet the cash cattle markets got along just fine.

Finally, I will not, under any circumstance, consider reforming and re-opening Barnhardt Capital Management, or any other iteration of a brokerage business, until Barack Obama has been removed from office AND the government of the United States has been sufficiently reformed and repopulated so as to engender my total and complete confidence in the government, its adherence to and enforcement of the rule of law, and in its competent and just regulatory oversight of any commodities markets that may reform. So long as the government remains criminal, it would serve no purpose whatsoever to attempt to rebuild the futures industry or my firm, because in a lawless environment, the same thievery and fraud would simply happen again, and the criminals would go unpunished, sheltered by the criminal oligarchy.

To my clients, who literally TO THE MAN agreed with my assessment of the situation, and were relieved to be exiting the markets, and many whom I now suspect stayed in the markets as long as they did only out of personal loyalty to me, I can only say thank you for the honor and pleasure of serving you over these last years, with some of my clients having been with me for over twelve years. I will continue to blog at Barnhardt.biz, which will be subtly re-skinned soon, and will continue my cattle marketing consultation business. I will still be here in the office, answering my phones, with the same phone numbers. Alas, my retirement came a few years earlier than I had anticipated, but there was no possible way to continue given the inevitability of the collapse of the global financial markets, the overthrow of our government, and the resulting collapse in the rule of law.

As for me, I can only echo the words of David:

“This is the Lord’s doing; and it is wonderful in our eyes.”

With Best Regards-
Ann Barnhardt

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c'mon man's picture

Santelli just said that traders were walking up to him with tears in their eyes unable to get their money....then they cut away to Liesman real quick for happy news...

Captain Benny's picture

They're now openly proclaiming how they are "Team Hopium" and they're intent on reporting only good / positive news.  Sounds like the string pullers behind CNBC are getting more blatent in an attempt to pump.

Cammy Le Flage's picture

Gulp.  Holy shit. 

Gubbmint Cheese's picture

Google Anne Barnhardt and read her website.. then check out her Youtube videos.. this will provide some context and background about this person.

Waffen's picture

oh its that lady? lol.. did she actually manage much money?

Her Koran burning video is a riot.


reload's picture

She does seem pretty happy to speak her mind. Good for her but I expect whe has some agro coming her way. From what I just read she will not be too easy to intimidate.

caerus's picture

good call...still i can't help but agree with her points about the market at least

Cammy Le Flage's picture

Gulp.  Holy shit. 

Saro's picture

I gulped and said "Holy shit" twice too, so you're covered.

Matevski's picture

Check out Gerald Celentes reaction at the Alex Jones show to the whole thing, and the robbery the MotherFuckers did to him. Priceless. Hope they guy gets some of his gold back, but I doubt it..

Debt-Is-Not-Money's picture

Don't mss Celentes interview on 12-1-11 Kingworldnews:


Don't miss Nigel Farage either...

Shadowsil's picture

This post actually deserves a 3rd Holy shit. I think after this one other exclamations must be used...


Holy Shit!

equity_momo's picture

Slowly the momos are waking up.  They still need an IV of double fuck strong caffeine to get the big picture though.

derek_vineyard's picture


I better reread it. Where does he suggest you keep these funds, In your brokerage sweep account? That clearing house is vulnerable too...is it not?  In 0% yielding government paper which is hard to even find these days or in other FDIC instruments.

Where is he suggesting to put the proceeds from the liquidation ????

(True ZHers know the only real safety is physical PM----I'm wondering where he think you should keep your cash dollars)

Cammy Le Flage's picture

He doesn't.   There is no where to go.  System Fail.  Black Screen.  It does occur.

DollarMenu's picture

In spite of the ballsy action,

the he is a she.

Sabibaby's picture

How many dudes do you know who are named Ann?

Let them eat iPads's picture

Coulter is the only one I can think of.

WonderDawg's picture

LMAO That was great, thanks for the laugh.

Sudden Debt's picture

how many dudes do you know who are named Obama?


ddtuttle's picture

Real cash money in a safe bolted to the foundation of your house. And don't tell anybody its there.


Widowmaker's picture

Still under 5 minutes with a torch and shitty metal detector.

Safes only consolidate your valuables surrounded by hope.

Temporalist's picture

Time to go to the mattresses!

CrockettAlmanac.com's picture

I don't like violence, Temp. I'm a businessman. Blood is a big expense.

mfoste1's picture

ohh dont worry we still have cheddar bay biscuits, MW3 and a variety of mountain dew flavors. All is well....

catacl1sm's picture

I like Chicken-in-a-Biscuit. that shit's addictive.

Big Corked Boots's picture

I always ask for more biscuits, then put them in the doggie bag for home. Mmmm, cheddaaahhhh...

Money? Oh, here's the card.

justanothernerd's picture

This demonstrates a level of morality I had no idea existed in the financial world. 

Dr. Acula's picture

It seems the woman is very religious, judging by the bible quotes on their site.

I think what she says is correct, but not necessarily everyone else will figure it out that fast.


ForWhomTheTollBuilds's picture

Not even slightly religious myself, but I do credit them with "at least believing in something".  You need some kind of a moral framework from which to make judgements and hopefully it evolves as you go through life, learning and growing.


I agree with you though that most people being thouroghly disinterested in value systems will continue to see MF Global and other events as the content of gossip rather than an indictment of our approach to values.

hedgeless_horseman's picture



What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate.





*Please do not read the funds availability fine print on the FDIC signs at the bank teller windows.

SheepDog-One's picture

What can I say except 'I told em so'.

Of course no one would believe it, nah, all was well! Hell we had green shoots. Oh well.

Caviar Emptor's picture

I credit you, Sheep. We were on it

Conax's picture

First lock the door, then burn down the house. Maximum damage that way.

Freakin ratz. A green for ya..

CPL's picture

Oh it has...many times in fact.  Does it without warrant or justification at times.


And people still think that the FDIC promise of insurance is worth anything.  All the FDIC does is provide another venue of government employment that produces nothing at the end of the day.

adr's picture

I love that small print. Pretty much says you aren't getting a penny because you are covered up to $250k in non interest bearing accounts. If you've got cash in a big bank, you ain't getting nothin when it all goes down. The banks don't have it and the gov isn't going to give it to you. A couple people in my family told me I was crazy. I told them to go try and take 5 grand out of an account and see what happens. At the next holiday I wasn't called crazy anymore.

ArkansasAngie's picture

you go girl.

It is time to stop the fleecing of Americans by the cabal.

I suggest we contact all of our representatives and demand an investigation.  On an individual basis, it is the only way for them to avoid being part of the problem.

Cammy Le Flage's picture

Our representatives are just as bad.  No need to contact anyone but each other.  Check out of the whole thing.  We can start a new system.  "Yes we can"  Tee hee.   That Obama statement gonna haunt him.   And not in a good way.

DB Cooper's picture

Didn't take long for Bruce to be proven right.  MFG is the start. 

InfoMacion's picture

I know now that Obama is worse than Bush Jr.

I thought Bush was really bad.

NotApplicable's picture

Meh, what's the value of moral relativism?

One plays dumb while a false-flag attack occurs, and the other plays dumb while JPM devours the few remaining entities "not in the club," destroying the futures markets along the way. You can be sure of one thing though, both JPM and GS are getting paid back for doing all of the Treasury's dirty-work, with neither having to worry about the future of their PM shorts.

mt paul's picture

all paper

is ponzi

TheAkashicRecord's picture
Criminal Prosecutions for Financial
Institution Fraud Continue to Fall



Federal prosecutions for financial institution fraud have continued their downward slide despite the financial troubles reported in this sector. The latest available data from the Justice Department show that during the first eleven months of FY 2011 the government reported 1,251 new prosecutions were filed. If this activity continues at the same pace, the annual total of prosecutions will be 1,365 for this fiscal year, down 28.6 percent from their numbers of just five years ago and less than half the level prevalent a decade ago.



Number Year-to-date 1,251



Percent Change from previous year





Percent Change from 5 years ago





Percent Change from 10 years ago





Percent Change from 20 years ago

DB Cooper's picture

Looks like a good buying opportunity!

TheAkashicRecord's picture

Are you assuming the trend is going to reverse?  Don't hold your breath!