Never ever put all your eggs to one broker

DanPickUp · Nov 4, 2011

Hi

I open this thread for those which have no idea about what can happen, when putting money in to a brokers account.

I am clear, that this what I talk now has to do with the situation in the United States, MFGlobal broker, but do not think this never can happen in India.

If we choose a broker, we do our best and in general we then think, that we made the right decision and choosed a serious, good broker and now all our money is safe and we only can concentrate on trading.

But this is not always the case as we also not always will make money with every trade we do.

What I am expressing now is from my own experience, as MfGlobal is not the first bankruptcy case I am with.

In the past,there was a company which was named REFCO. At this time our money was with a company which was owned from REFCO. At the moment REFCO signed chapter 11 ( Bankruptcy case in the USA ), we had luck and our money was not touched.

This time it is a bit different: Some of our money is locked and we not can get it out as it is with MFGlobal.

Read this article very careful and hope fully it opens every body's eyes what can happen when putting money to any broker:

Nov. 4 (Bloomberg) -- MF Global Inc.s trustee asked a judge for permission to subpoena the companys directors and officers, saying he needs to find out if fraud or misconduct led to the bankruptcy and what lawsuits he might bring.

The subpoena would grant the authority to demand documents and question the brokerage firms officers, directors, lenders and trading partners, trustee James W. Giddens said yesterday.

In order for the trustee timely and efficiently to conduct a comprehensive investigation and fulfill his fiduciary and statutory duties, it is imperative that the trustee gain immediate and complete access to information, he said in a court filing.

Commodity customers of the brokerage formerly run by former Goldman Sachs Group Inc. co-chief executive Jon Corzine have a shortfall of $633 million, or about 12 percent, the Commodity Futures Trading Commission said Nov. 2. Getting information and interviews with certain business and governmental entities may require a subpoena, Giddens said.

Using bankruptcy law, a trustee can demand return of transfers made just before the bankruptcy, and other transfers if he can show they werent taken in good faith, said Stephen Harbeck, president of the Securities Investor Protection Corp., which is overseeing the liquidation of MF Global.

Money Back

That is what trustees do -- they get the money back, he said in a phone interview yesterday.

Giddens froze 150,000 customer accounts on Oct. 31, including 50,000 commodities accounts that he aims to transfer to other futures brokers before the weekend, he said yesterday.

CME Group Inc., which runs a futures exchange, is working with other exchanges to match the commodity accounts with brokers, Giddens said through a spokesman in an e-mail.

Corzine hired lawyers from Perkins Coie LLP in New York to represent him in the brokerage liquidation and the reorganization of the parent holding company, Perkins Coie said in a filing in bankruptcy court.

Corzine also has retained Andrew Levander, a Dechert LLP partner, to represent him in the fallout from MFs collapse into bankruptcy, according to a person with knowledge of the matter. Levander didnt immediately return an e-mail seeking comment after regular business hours yesterday.

An MF Global investor sued Corzine and the companys board yesterday for allegedly making misleading statements about the firms financial condition before its collapse. Corzine issued statements touting the companys internal financial controls and liquidity levels that were materially misleading or untrue, according to the complaint filed in Manhattan federal court.

Power, Influence

Joseph DeAngelis, who filed a the lawsuit on behalf of himself and other MF Global shareholders, also named as defendants Henri Steenkamp, the New York-based companys chief financial officer, and Bradley Abelow, its president.

Defendants had the power and influence -- and exercised such power and influence -- as to cause MF Global to engage in the unlawful conduct and practices, DeAngelis said. Each of the defendants is liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of MF Global common stock.

MF Global sought bankruptcy court protection after making bets on European sovereign debt. The firm listed liabilities of $39.7 billion and assets of $41 billion in Chapter 11 papers.

Diana Desocio, a spokeswoman for MF Global, didnt immediately return a voice-mail message left at her office seeking comment on the lawsuit yesterday.

The brokerage case is In re MF Global Inc., 11-ap-2790, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The investor case is DeAngelis v. Corzine, 11-cv- 7866, U.S. District Court, Southern District of New York (Manhattan).

--With assistance from Edvard Pettersson in Los Angeles and William Rochelle in New York. Editors: Charles Carter, John Pickering

To contact the reporters on this story: Linda Sandler in New York at [email protected]; Patricia Hurtado in New York at [email protected]

To contact the editors responsible for this story: John Pickering at [email protected]; Michael Hytha at [email protected].

Important news about this case will be posted from time to time in this thread.

DanPickUp

DanPickUp · Nov 4, 2011

Just received this information and now lets see if what happens:

CME Group Statement on Transfer of MF Global Customer Accounts

CHICAGO, Nov. 4, 2011 /PRNewswire/ -- On November 3, 2011, CME Group successfully transferred nearly 5,300 MF Global customer accounts and more than $410 million of CME Clearing-held collateral to other qualified clearing firms. CME Clearing continues to hold MF Global proprietary and customer collateral that will be distributed upon instructions from the Trustee and the bankruptcy court.

CME Group expects transfers for additional accounts at CME and the other exchanges and clearinghouses to continue throughout the day today. Customers with accounts transferring will receive communications from their receiving firm following the transfers.

CME Group's primary focus is the protection of our customers and the integrity of our markets. We would especially like to thank the CFTC and the SIPC bankruptcy trustee for their efforts to recover customer segregated funds held by MF Global. We also want to thank the receiving clearing firms, market participants and their teams as well as the other exchanges and clearing houses that have participated in this process, including CBOE Futures Exchange, The Clearing Corporation, ICE Futures US, ICE Clear US, KCBOT and KCBOT Clearing Corp., MGEX, NYSE Liffe US and The Options Clearing Corporation.

As the world's leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through its CME Globex electronic trading platform and its trading facilities in New York and Chicago. CME Group also operates CME Clearing, one of the world's leading central counterparty clearing providers, which offers clearing and settlement services for exchange-traded contracts, as well as for over-the-counter derivatives transactions through CME ClearPort. These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk in both listed and over-the-counter derivatives markets.

CME Group is a trademark of CME Group Inc. The Globe Logo, CME, Globex and Chicago Mercantile Exchange are trademarks of Chicago Mercantile Exchange Inc. CBOT and the Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago, Inc. NYMEX, New York Mercantile Exchange and ClearPort are registered trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. All other trademarks are the property of their respective owners. Further information about CME Group (NASDAQ: CME) and its products can be found at www.cmegroup.com.

CME-G

SOURCE CME Group

mubzaveri · Nov 4, 2011

DanPickUp said:

Just received this information and now lets see if what happens:

CME Group Statement on Transfer of MF Global Customer Accounts

CHICAGO, Nov. 4, 2011 /PRNewswire/ -- On November 3, 2011, CME Group successfully transferred nearly 5,300 MF Global customer accounts and more than $410 million of CME Clearing-held collateral to other qualified clearing firms. CME Clearing continues to hold MF Global proprietary and customer collateral that will be distributed upon instructions from the Trustee and the bankruptcy court.

CME Group expects transfers for additional accounts at CME and the other exchanges and clearinghouses to continue throughout the day today. Customers with accounts transferring will receive communications from their receiving firm following the transfers.

CME Group's primary focus is the protection of our customers and the integrity of our markets. We would especially like to thank the CFTC and the SIPC bankruptcy trustee for their efforts to recover customer segregated funds held by MF Global. We also want to thank the receiving clearing firms, market participants and their teams as well as the other exchanges and clearing houses that have participated in this process, including CBOE Futures Exchange, The Clearing Corporation, ICE Futures US, ICE Clear US, KCBOT and KCBOT Clearing Corp., MGEX, NYSE Liffe US and The Options Clearing Corporation.

As the world's leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through its CME Globex electronic trading platform and its trading facilities in New York and Chicago. CME Group also operates CME Clearing, one of the world's leading central counterparty clearing providers, which offers clearing and settlement services for exchange-traded contracts, as well as for over-the-counter derivatives transactions through CME ClearPort. These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk in both listed and over-the-counter derivatives markets.

CME Group is a trademark of CME Group Inc. The Globe Logo, CME, Globex and Chicago Mercantile Exchange are trademarks of Chicago Mercantile Exchange Inc. CBOT and the Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago, Inc. NYMEX, New York Mercantile Exchange and ClearPort are registered trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. All other trademarks are the property of their respective owners. Further information about CME Group (NASDAQ: CME) and its products can be found at www.cmegroup.com.

CME-G

SOURCE CME Group

Dan bro,
If this is the case then how safe r we with brokers like,
zerodha,rkglobal,unicon,etc..........
does SEBI has any provision for our safety

DanPickUp · Nov 5, 2011

mubzaveri said:

As I not have an account in India, you may check with your bro how they value the brokers in India. Do it carefully and chose different brokers if you have bigger money you want to do trading with.

The MFGlobal case did not affect accounts by itself in India nor did it any transaction of any security.

Latest positive information/update I have:

November 4, 2011 1:31 PM EDT

MF Global's missing client funds said to be located at JPMorgan (NYSE: JPM), hearing $658.8 million in funds. ( Bloomberg )

---------

Starts to look better, at least for the moment.

Tc

DanPickUp

Newbie Day-Trader · Nov 5, 2011

mubzaveri said:

I don't know why people keep looking at the government for safety when the simple fact is that the government is a monopoly of power & violence, it has no incentive to provide good service because it can willynilly take "Hufta" (taxes) from people no matter what; have you not read enough about all the "ghotalas" wthin the government in the last few years? And this is nothing new, it's been going on for a long time, it's just that recently many of them became public; this is the same story more or less for ALL governments everywhere, & people still expect government to do a good job!

As I've said, they don't need to as they can just take all the money they want from the people.

Just as there are inherent risks in the markets, people must come to realize that the same holds true for life as a whole & stop looking for a parent-figure in the government because it has never been & never will be. The government is their to make its own "profits" by selling hope of security to the masses, people just need to learn to live with risks.

The only thing we can do is hedge & mitigate risk by "NOT putting all of our eggs in one basket" like Mr. DanPickUp has said :thumb: Even after doing a thorough check on the broker, we CAN'T presume safety of our funds nor can SEBI or any stupid arm of the government ensure it. We must always have our "stop-loss" for future unforeseen risks.

And just look at who's doing the most to fix the issue, CME, a PRIVATE entity! WHY? Because they've vested-interest, they don't want people to get scared of trading & about safety of their funds because that'll hurt their profits in the long-run while the government has its sure-shot "Hufta" whether it does well or not. Cheers

DanPickUp · Nov 5, 2011

Nov 5 (Reuters) - Bidding for MF Global's operations in Asia and Australia was extended by one day because of an influx of offers for the collapsed U.S. brokerage, a provisional liquidator for the company's Hong Kong unit said on Saturday.

MF Global filed for bankruptcy in the United States on Monday after risky bets on debt from troubled euro zone nations scared away clients and investors.

Patrick Cowley, a principal at KPMG in Hong Kong and one of the provisional liquidators for MF Global's Hong Kong units, told Reuters on Friday they had received almost 40 inquiries from potential buyers for the business and expected to seal an agreement by Sunday.

That number jumped to more than 50 potential bidders as of Saturday and the bidding was extended to 8 p.m. Monday, KPMG said.

"As we have received a significant increase in the number of interested parties in the last 24 hours, in order to run a full and fair process, and to generate the most value for stakeholders, we have taken the decision to extend the window of opportunity for bidders to prepare, Cowley said in an e-mailed statement.

"We remain confident that a deal can be reached that will keep the MF Global Asian franchise intact," he added.

In Asia the brokerage has large derivative businesses in Singapore and Australia as well as offices in Hong Kong, Tokyo, Taipei, Shanghai and a joint venture in India with Sify Technologies Ltd .

MF Global's last annual report said it generated around 14.4 percent of its global revenue in Asia during the 2010-2011 financial year, which would be around $321.6 million before interest and transaction-based expenses.

mubzaveri · Nov 5, 2011

Newbie Day-Trader said:

I don't know why people keep looking at the government for safety when the simple fact is that the government is a monopoly of power & violence, it has no incentive to provide good service because it can willynilly take "Hufta" (taxes) from people no matter what; have you not read enough about all the "ghotalas" wthin the government in the last few years? And this is nothing new, it's been going on for a long time, it's just that recently many of them became public; this is the same story more or less for ALL governments everywhere, & people still expect government to do a good job!

As I've said, they don't need to as they can just take all the money they want from the people.

Just as there are inherent risks in the markets, people must come to realize that the same holds true for life as a whole & stop looking for a parent-figure in the government because it has never been & never will be. The government is their to make its own "profits" by selling hope of security to the masses, people just need to learn to live with risks.

The only thing we can do is hedge & mitigate risk by "NOT putting all of our eggs in one basket" like Mr. DanPickUp has said :thumb: Even after doing a thorough check on the broker, we CAN'T presume safety of our funds nor can SEBI or any stupid arm of the government ensure it. We must always have our "stop-loss" for future unforeseen risks.

And just look at who's doing the most to fix the issue, CME, a PRIVATE entity! WHY? Because they've vested-interest, they don't want people to get scared of trading & about safety of their funds because that'll hurt their profits in the long-run while the government has its sure-shot "Hufta" whether it does well or not. Cheers

lagta hai poori duniya chooron se bhari hui hai...
anyways,i asked that question because i thought that our money was protected by sebi,
didn't know that sebi is no different than goverment(choor)

preethnfo · Nov 6, 2011

NewBie Day Trader , it is looking that you have your own style of thinking and a different kind of rising points than masses. each one should have different perspective and with a humanly touch. you are looking in the side of hard truths. I want to know more from your point of view what will be the better things to be done in the future for the sake of better india.

Newbie Day-Trader · Nov 6, 2011

mubzaveri said:

I don't know if everyone is a thief or not.........but I'll say this much with my limited understanding of things that everyone is driven by their perceived self-interest so if you put a wolf in-charge of sheep then you know what's likely to happen, right! :lol:

Well, "technically" SEBI is "supposed" to ensure safety of our funds, etc etc ........but then "technically", all the taxes government steals from us are to be spent on development of the country, blah blah........BUT does that REALLY happen? NO, it goes down the throats of the government.......so SEBI being a government's arm, what incentive does it have to do its work well? NONE, if something goes wrong then they'll blame it on someone or something else, that's what governments always do & exonerate themselves.
Not to mention "upper ki kamaai" that's there in almost every government office.......why is it that Indians can't freely invest their OWN MONEY in foreign markets? Well, may be government & SEBI & such are getting bribes from the Indian exchanges to keep things that way so that Indians are indirectly forced to invest in Indian markets only or may be some other reason but be rest assured that someone somewhere is benefitting by preventing us from being able to invest abroad otherwise government wouldn't put restrictions on it.........why restrictions on forex trading? Well, may be because that doesn't allow RBI & government to play "dictator-dictator" with the Indian economy as easily or may be because they're thinking of tax-evasion or whatever but again, the point is that someone somewhere must be benefitting from it otherwise the restrictions wouldn't be there.

You know, before 1990s, when Indian markets were largely closed & highly "regulated", domestic Indian companies would bribe the government to block imports of cheap, high-quality foreign products, so that Indians are forced to buy local low-quality & expensive goods. Of course, later, an economic emergency forced government to open up our markets a little bit which transformed the country in many ways & raised millions out of poverty, it's only the power of markets & freedom that has effected this change.

Again, these are just few examples of why government power always has been & always will be misused because as I've said, people are driven by their perceived self-interests so we just can't expect the government to be honest & upright; basically, government = corruption, & no system can change that substantially, we can only reduce it by reducing government's size & scope of its powers to a minimum. Cheers

Newbie Day-Trader · Nov 6, 2011

preethnfo said:

Well, to be honest, my thinking is nothing different, it's been there for centuries, may be it's just that most of us aren't exposed to it as much as we should be but Internet & such communication networks are helping the spread of information & best ideas around the world to different parts of the world quicker than it used to.

Well, talking about politics & economics & such, these are very vast & intricate topics, & it isn't always possible to explain them in brief, not to mention, this forum isn't dedicated to that end anyway.

But my view is basically to move towards MORE FREEDOM & freer markets & LESS GOVERNMENT because as I've said, basic economics & psychology clearly tell us that humans are driven by perceived self-interest hence it's very naive of us to put people in a position of power (i.e. government) & to expect that they won't use that power to advance their self-interest, of course they will, you can see that in every democracy in the world, politics everywhere is just as muddled & corrupt because power attracts the power-hungry, as simple as that.

Most people talk about freedom but very few can define it for themselves so for my part, I'll define freedom as the condition of being free from violence, coercion, fraud or theft of ANY KIND (including theft & coercion by government through taxation); basically a society/country based on people interacting with each other based on MUTUAL CONSENT because that's what makes for a prosperous society, socially as well as economically.

Let's not forget India was suffocating under a strong socialist regime until the 1990s, after which, due to an economic crisis, Indian government was forced to open up the markets a little bit (in part by International-agencies which had their own self-interest in it), which unleashed vast untapped potential of the country & its people & put it on its current development-path while raising millions out of destitute poverty faced under a strong socialist government; no government can do this, only freedom & markets can, government can only hinder the process by sucking productivity & money out of the economy in a variety of ways. Even the communist-China was rotting under their policies until 1980s or so when they significantly opened up their markets & even there we've seen an explosion of growth & eradication of poverty, it's nothing but power of the markets & that's why it needs to be unleashed fully instead of governments holding it back for their own self-interest, for which the government's power must be curtailed first & kept to absolute minimum.

Again, it's a vast topic & not very easy to explain in brief so may be if you have any specific questions then it might be easier to address them. Cheers

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Never ever put all your eggs to one broker

Should brokers be allowed to speculate ?

Yes

No

Only when the customer accounts are controlled by different independent trustees

The law first has to change the rules for it

DanPickUp

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DanPickUp

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mubzaveri

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DanPickUp

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Newbie Day-Trader

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DanPickUp

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mubzaveri

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preethnfo

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