This page has been archived and commenting is disabled.
Second MF Global Unveiled As Canadian Regulator Accuses Barret Capital Of Commingling Client Funds
When we learned of the MF Global client theft scandal, in the aftermath of its sudden bankruptcy filing, the one thing we predicted would happen (in addition to Jon Corzine never going to prison) was that many more brokers, banks and broadly financial intermediaries would be discovered having dipped in client accounts, or otherwise "commingled" capital in direct violation of the first rule of banking. Sure enough, a little over two months since, the second notable company to have been alleged to have abused client capital for own purposes has emerged. And it comes to us courtesy of sleep Canada whose "banks are all fine." As the Winnipeg Free Press reports, "One of Canada's investment regulators has accused Barret Capital Management, a firm specialized in futures and options on metals and other exchange-traded commodities, of using client money for its own purposes. The Investment Industry Regulatory Organization of Canada warned Monday that Barret clients are at risk due to the firm's "ongoing misappropriation of their money to fund losing trades and ongoing misinformation about the value and holdings in their accounts." IIROC has set a hearing for Tuesday morning to suspend Barret's membership in the organization and stop Barret from dealing with the public. In requesting the expedited hearing, the regulator alleged Barret made "significant misrepresentations to clients including through manipulating account values, misrepresenting account values and holdings by way of false account statements or otherwise providing false information to clients and by manipulating on and off book payments to clients." Where the story gets even more interesting is when one takes a look at just what it is that the company engages in, and how it fits into the scenario analysis conducted in the MF Global aftermath.
From the company's blog, which has all about 5 entries:
Barret Capital is an Investment Dealer that specializes in futures and options on metals, energies and all other Exchange-traded commodities, located in Toronto Ontario.
And the website's About Us section:
Dedicated to guiding commodity investors in Canada to safer, more focused investments in hard assets like gold and silver
Buying hard assets like gold and silver will protect you from the instability of today's market place. As a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investors Protection Fund, we are a full service boutique firm dedicated to guiding novice and experienced commodity investors in Canada towards smart investments, including buying and selling gold, silver and other hard assets.
Our expert brokers, staff and management will guide you from beginning to end, ensuring that you become an educated commodities trader who makes more profitable trades in the exploding gold, silver and commodities market.
We offer our commodity investors in Canada the following services:
Buying and selling gold, silver, and other commodities
Buying in derivatives or hard assets
Providing on-demand market quotes
Offering delivery and storage options
Placing stop-loss orders
Offering online account views
Providing regular research reports
Consulting from bullion specialists
Liquidating holdings
If you are a commodities investor in Canada, contact us today to learn more on how buying and selling gold and silver can help you profit from a booming commodities marketplace.
And finally, per the President's message, the fallout may next impact carrying broker Laurentian Bank:
At Barret Capital Management Inc., we pride ourselves in being a full service, commodities futures Investment Dealer located in the heart of Toronto, Ontario. The decision to choose Laurentian Bank Securities as our carrying broker was an integral one, as Barret Capital Management Inc. is able to provide its clients with the best of two worlds: personal attention to your financial objectives that you'd expect from a boutique commodities futures firm, along with the breadth of knowledge, information and integrity that a large carrying full service brokerage bank can provide.
Our Toronto commodities futures brokerage is special because we believe in building real relationships with our clients. At the end of the day, taking care of your individual interest is at the core of everything we do.
What all this means is that as expected MF Global may have been the first, but certainly will not be the last, to use client capital to prop up its books. And while Barret is not Goldman, it is merely the next company which could no longer perpetuate the lie. Of course, the bigger one is, the harder it is to be caught. Once caught, however, the ripple effects spread fast and furious.
In Barret's case, this latest incursion in fiduciary duty will simply make paper investors even more skeptical of keeping precious metal "investments" in a paper intermediary, something we warned about when we discussed the fallout from MF Global on HSBC gold claims. Because those too are just the beginning.
Finally, while still unclear what the premise behind the regulatory allegation is, readers will recall our final warning that as in MF Global's case, the fundamental weakest link in the system, was the rehypothecation of assets to make funding appear sufficient and credible, when in reality it is nothing but hot air. Specifically, we said: "Canadian banks, which as it also turns out, defended themselves against Zero Hedge allegations they may well be the next shoes to drop, as being strong and vibrant, yet which have all the same if not far greater risk factors as MF Global."
This was merely the first. We expect many more, Canadian, and otherwise banks, to follow suit, in a world in which broker funding is virtually nonexistent at this moment.
»
- 18830 reads
- Printer-friendly version
- Send to friend
- advertisements -
Hey br8k... take it easy. We like Canada. The only thing the Canadians ever stole from me is my American bacon at the border crossing near International Falls... The customs guys did it three years in a row when I was fishing in Lake of the Woods.
Personally, I like American bacon better. Canadian bacon is more like ham. I guess the customs people think American bacon has coodies or some exotic disease... but, it doesn't seem to kill Americans who eat it immediately. :)
You mean it doesn't have cooties???? Wow, learn something new everyday.
Thanks, I needed that picture, perfect.
Nice touch with the Bucky balls, as they possess wave-particle duality.
Just don't let Corzine or the other harpies know - they'll use it in a legal defense.
"Wave–particle duality postulates that all particles exhibit both wave and particle properties. A central concept of quantum mechanics, this duality addresses the inability of classical concepts like "particle" and "wave" to fully describe the behavior of quantum-scale objects. Standard interpretations of quantum mechanics explain this paradox as a fundamental property of the Universe, while alternative interpretations explain the duality as an emergent, second-order consequence of various limitations of the observer."
(http://en.wikipedia.org/wiki/Wave-particle_duality)
The act of observation collapses the wave function.
Must be why Corzine didn't see anything.
Hey BillyB. The other day you had a post of Mitt Romney marching along in a Wonder Woman or baton girl looking outfit, big models grin on his face. Do you have the ability to print that onto a T-shirt? What about a pic of my most hated politician implanted there?
Al.
http://fnn24.com/?p=38993
Earnings estimate
well, at least canadian real estate can only go up! since i'm new to investing, does anyone on this board know, when i should start going long BRE-X?
If you can find Michael de Guzman he could give you a good tip I'm sure.
Him or Warren Buffet.
I am amazed that people still have money in their brokers accounts. Seriously didn't people learn from MFG?
So does this mean they've got one week to completely clean out all segregated accounts. Fuckin' Lol.
When the music stops. What you hold is what you got. Wake the fuck up.
I just checked their website http://www.barretcapital.com/
There is no news, and everything seems to be ok.
So you can still open and account if you want to.
Can't be true.
Jimbo Foghead Flaherty and Steven Hitler Harper said it ain't so.
Ps...
Fuck you's mutt and jeff.
Their "bullion consultant" is probably Jon Fuckhead Nadler.
But he doesn't speak Canadian!
While it's likely that Barrett is in the process of blowing up and it's been behaving badly, it's important to note that IIROC is an obvious pet of Canada's banks, and regularly does their bidding to stifle competition against the bank's own brokerages. There have been whisperings that it's time to have a non-bank industry regulatory body because they quite simply suck up all the oxygen.
So does this mean my Canadian Moose Meat call options for 2013 are worthless?!
hardley! it's a BULLwinkle market for moose meat!
I believe the fsa just fined Mr. dimons bank in england for doing the same thing. saw in ft. this isn't unique. it's an industry which uses criminal activity on a regular basis. yet no matter how often one frirm is found, they don't break it up.
Corporate Governance? Why didn't Congress interrogate the corp gov lawyers/accountants since these folks are supposed to "ok" or block taking money from client funds and other shady transactions.
Odd...none were called before the panel. Seems like the new Global Financial Motto is, "Why steal less when you can steal more."
"Seems like the new Global Financial Motto is, "Why steal less when you can steal more."
...............................
Nothing new here. Everyone knows, or should know, that the best way to rob a financial institution is to own/control one.
This goes for the entire FIRE sector... finance, insurance, real estate.
Why are they (Barret and MFG) comingling funds? Both commodities dealers with PM? Anyone notice a pattern forming?
Maybe they are re-pledging the PMs and playing games because they are out of the physical.
Watch Sprott next.
Sprott's whole system is set up to counter the paper fraud that he knows is out there. This is what he has been saying would happen the whole time.
I agree, I think Sprott is clean. But spinone has a point, if someone wanted to reduce access to the futures markets by retail clients what better way than to scare the shit out of them. I think you would have a hard time convincing a prudent person to put money into any futures brokerage right now. By failing to get total and complete control over this situation, regulators have really missed it. Alot of good honest brokerages are going to be hurt by this, they should be screaming bloody murder right now.
How dare you cast aspersions upon the Canadian financial services industry. I have been a member for 35 years and there has NEVER been a scandal EVER.
P.S. The Governor of the Bank of Canada is an ex-Squid so Canada MUST be "clean".
Gold is real money and tempts "Our Lesser Angels" ! You just can't trust anyone with YOUR gold ! When TSHTF how many of these brokers, dealers, storers of OPG (OPM) will abscond with the goods ? Don't expect the Government, who created the dishonest fiat money system, to protect you....they are the "Mothers Of All Crime" ! Any honest brokers with "Stax Intact" will be subject to (sitting ducks) Government looting (confiscation) ! There's no place to delegate this most fundamental of all your responsibilities.....CYA ! Monedas Realitas Comitatas 2012 !
Honestly, all money looks the same, so how could anyone be expected not to mix it?
Ironic Barret ad on zerohedge.com up here in Canada.
http://goldandsilverlinings.com/?p=1838