MF Global Spreads has ceased to be

[Traduk]

I had about £62k in MF Global. My account was opened in 1999 with GNI as segregated but I cant find my original paper. KPMG tell me that I am non segregated. I cant prove that they are wrong.

My question is do we feel that segregated clients will get 100% before non segregated get a penny. I would have thought thats the case. I have claimed with FSPC and I think I will get £50k back withing three months so in reality I just need £12k from the administrator.

I had an account with GNI and still have the e-mails from that era. If I recall correctly all of the forms and agreements were read, sign and return so unless you made copies there were none for you to retain. I will have a hunt through my filing cabinets to see if I can find anything but I have a suspicion that GNI didn't do segregation.

I wish you luck and hope that you get all of your money back and although I feel sure that you know the information url I will link it anyway.

MF Global UK special administration | KPMG | UK

 

[howard0181]

tradeuk

I am certain I was segregated when I opened my account but I dont have any records.

Do you think segregated people will get 100% before non segregated people get a penny ?

 

[lplate]

...The update on the site for the 3rd February does mention a contact to be made to each client by letter which when returned with a signed indemnity will enable the interim distribution (barring problems). ....

On the $ v £ matter, I think a letter went to "Clients" on 3rd Feb with Annex 3 asking for details of their bank account into which to pay the interim distribution, and it includes:
"Please also note that whilst the Bank Confirmation Form states that payment of Client Money will be paid in USD, if you have a GBP account any dividend can (and will where this is the elected account) be paid in GBP (converted by the bank on the date of payment). For any currency accounts other than GBP payment will be paid in USD."

 

[lplate]

lplate,

good points. Properly segregated funds held with a retail trading firm will sit in a Trust account at the Bank. The Bank gives a commitment not to use those funds, so yes it could be viewed as safer.....except.....Banks are for the most part safe (govt backing and lender of last resort) so the actual risk lies with the trading firm still...they are the ones who ultimately have to put (or not..MFG) the funds in the segregated trust account. This is where the breakdown happens.

Thanks Hirose Financial UK for explaining. I think what you imply is that a spreadbet provider using segregation is better for the retail customer than one which does not, but the segregation is meaningless unless it is enforced. Furthermore, from a future marketing point of view, a spreadbet provider would be advised not merely to proclaim segregation, but to display adequate enforcement, such as the process of signature of an independent outsider who can prove he/she is not bribed or bullied. (One imagines the independence would have to be particularly sturdy to withstand the bullying by a Chief Exec such as Robert Maxwell, who was exactly the sort of person to think nothing of raiding a segregated fund.)
I was wondering what adequate procedure would be of withdrawals from the segregated account to ensure that the size of the segregated account remains matching the balance of deposits. Would it be to check the target account of the withdrawal, e.g. that it matches the source debit card/bank account of a customer, or would it be to scrutinise all withdrawals over, say, £100k?

 

[lplate]

....
3. From the retail customer’s point of view, MFglobalspreads offered an identical service to that of spreadbetting brokers using segregated accounts, i.e. a spreadbetting service, but the structure of the firm was completely different.
4. The FSA has not actually clarified its view on point 3 and so we don't yet know if it will adopt the customer’s viewpoint above and thus regard MFglobalspreads as a retail spreadbet service no different from any other spreadbetter.

KPMG posting implies FSCS will treat all retail the same: "Applying to the FSCS for compensation is a separate and parallel process to claiming against MF Global UK in the special administration. Compensation is available in relation to client money claims and unsegregated, unsecured client claims."
MF Global UK - Distribution of Client Statements | KPMG | UK

 

[Traduk]

KPMG posting implies FSCS will treat all retail the same: "Applying to the FSCS for compensation is a separate and parallel process to claiming against MF Global UK in the special administration. Compensation is available in relation to client money claims and unsegregated, unsecured client claims."
MF Global UK - Distribution of Client Statements | KPMG | UK

Although I left GNI in 2008 it was also my impression that the FSCS were going to treat retail clients of all Man group clients the same. Their criteria implies that businesses are to be treated differently but clients without differentiation.

I found my GNI statements from the time I joined them in September 2003.

All my statements up until 13\07\2004 carried the remark "non-segregated account" in the header. None of the statements after the 14\07\2004 had that remark anywhere on the statement. I also had an account with the Man DMA division at that time and I think from memory that both accounts were non-segregated for the entire duration I was with them.

I left them because they set the the bar too high for decent commission levels and I was never going to hit the round trip per month levels required to match what US brokers offered as normal.

On account closing and switching some of the funds to MFglobal spreads, segregated was or appeared to be standard. Although I similarly have nothing in writing I have been told by three MFglobal employees both at Man and subsequently that the account I held was segregated.

As soon as KPMG make a contact regarding initial distribution the situation should become clearer and in my case will prompt a telephone call to FSCS who although are waiting on KPMG to act have been very helpful to date.

After a long wait I have consistently been under the impression that the FSCS want this matter resolved and hopefully will act quickly once the information is forthcoming from KPMG.

 

[lplate]

. . . . FSCS who although are waiting on KPMG to act have been very helpful to date.
After a long wait I have consistently been under the impression that the FSCS want this matter resolved and hopefully will act quickly once the information is forthcoming from KPMG.

There's no reason why the FSCS shouldn't be helpful, prompt and heart-winning in paying out; after all, as Simon says, it is not their money.
Remember, unlike with some company pension schemes which have collapsed, all these MF customers weren't compromised into using MF, and had ample chance to check the small print and leave the service.
Now the likes of Simon, his shareholders and his perhaps more discerning customers are having to pony up thousands to get these lazy MF customers out of a hole. It may be a comfort to the beneficiaries, but it does not strike me as very fair.

 

[Traduk]

There's no reason why the FSCS shouldn't be helpful, prompt and heart-winning in paying out; after all, as Simon says, it is not their money.
Remember, unlike with some company pension schemes which have collapsed, all these MF customers weren't compromised into using MF, and had ample chance to check the small print and leave the service.
Now the likes of Simon, his shareholders and his perhaps more discerning customers are having to pony up thousands to get these lazy MF customers out of a hole. It may be a comfort to the beneficiaries, but it does not strike me as very fair.

Is it any less fair than every single taxpayer in the UK paying more in taxes to receive less for what they spend for not only now but far off into the future to bail out the bankers, the government etc for reckless gambling in the first case and profligate spending by the last administration in the second case.

Life isn't fair never has been and on past evidence is never likely to be.

If you look through what the FSCS has done since it came into being then it becomes evident that bailing out brokers has been a minuscule part of it past actions. It is there as the payer of last resort in order to maintain some confidence in financial institutions of many kinds that should those institutions fail then at least some money is certain to be returned.

Without that backing and given the potential for a loss in trust then instead of holding traders funds there is every likelihood that we would revert back to the era when I started trading. In those days it was usual for brokers to extend lines of credit and send out multiple margin calls on a daily basis. I doubt if many spread betters or other brokers for that matter have the financial reserves to be able to risk millions per day in the hope of recovering their outlay on margin or hedging operations.

In essence what I have tried to say in a verbose way is that the good guys only thrive because the environment is protected and some times they have to pay for that protected environment which is the way the world works or there is nothing for anybody.

As for laziness on the behalf of MF clients. I have had a few brokers go under whilst I have been a customer but mostly they were relatively small compared to the massive size of Man. If there is no safety in size (MF was stated as in the top 10 largest USA bankruptcies ever) then were is there safety.

 

[cookie]

Scose "Isnt 26c in the dollar 26% ??

Are you sure you are not my missus in disguise - she has a degree in the bleedin obvious !

Lplate " ....lazy MF customers ??

likely to miserably fail the Theory Test.

Howard0181 - how lazy can you be in depositing 60k into an segregated MF Global Client A/C and expecting it to be returned to you on request - who do you think you are ?

I should not be surprised if there will be any preferential consideration for payout between segregated and non-segregated funds. Assume KPMG will probably pay 26% of approved Client Money claims as interim dividend then advise on any final dividend some months later. I should think that until this process has been completed the FSCS will be unaware of any final compensation amount to be claimed by each client.

 

[scose-no-doubt]

Well if 26c on the dollar is 26% then why do you care whether it's deal is done in pounds or dollars? You already have the exchange rate that the liquidator is using you nob jockey.

 

[cookie]

The calculation in Stirling or Dollars was never in question merely that the administrators blurb suggested that payment would be made in Dollars and any exchange commission charged by the clients bank would be required to be covered by the client.

"nob jockey " is that an affectionate term used between you and your male friends - surely more suited to ADVFN ?

 

[lplate]

... so the actual risk lies with the trading firm still...they are the ones who ultimately have to put (or not..MFG) the funds in the segregated trust account. This is where the breakdown happens.

Yes thanks Hirose, and reading this it seems there is no independent filter through which withdrawals from customer accounts pass; the woman who did the transfer to cover the margin call was a mere employee (Asst Treasurer). (The Treasurer had the presence of mind not to be available himself maybe!)
Investigators Probe Money Transfers In Investigation Into Missing MF Global Customer Funds | Fox News
There looks also to have been no checks and balances that would have come from having different banks for different functions. JPM looks to have performed all functions (main banker, prop margin banker and customer banker) and happily received the money without a written assurance beforehand. (One bright spark obviously had the afterthought that such an assurance would be better late than never!)

 

[cookie]

As expected recent Supreme Court hearing ( re Lehman Brothers ) sets precedent and rules that both segregated and non-segregated monies to be treated as same - KPMG suggest that in the case of MF Global this will result in a substantially reduced payout ???

I have received first divi of 26p in the pound ( 26% ) paid directly into UK account in sterling. No statement or advice received from KPMG so cant see if bank has made any charge for currency conversion or not . Again I expect further divi - maybe final divi then hope that FSCS will cover the remainder. When - who knows - could take years ?????

 

[howard0181]

cookie

Just read your idiotic post. You will be pleased to note that I am getting £50k this week from FSPC. Just been confirmed to me and the other £11k will shortly be with me from KPMG.

 

[Traduk]

cookie

Just read your idiotic post. You will be pleased to note that I am getting £50k this week from FSPC. Just been confirmed to me and the other £11k will shortly be with me from KPMG.

It looks as though we are all being treated differently. I haven't heard a thing for weeks although I did ensure via a telephone call (KPMG) followed by a confirmation e-mail that I am in the system and awaiting processing.

Who is\are FSPC, please.

 

[lplate]

cookie
Just read your idiotic post. You will be pleased to note that I am getting £50k this week from FSPC. Just been confirmed to me and the other £11k will shortly be with me from KPMG.

howard, I'm glad you've got recompensed. Well done.
(PS I think cookie was being ironic about my "lazy" post (I suspected that many people had thought they were segs but were actually non-segs.))

 

[howard0181]

How dare he call me lazy!!!

I have emailed phoned and driven KPMG mad since late November. I backed this up with daily letters and phone calls to the FSPC and FSA. Eventually I got KPMG to get my account balance agreed and so I should be in line for £50k payment in a few days or perhaps a week.

As for Segregated issue my account was opened in 1999 with GNI. It was 100% segregated but I dont have the documents. Perhaps thats lazy of me to lose my file from 13 years ago.

 

[cookie]

Howard - if you refer back to Lplates original post 87 on 9th Feb you will note that it was he that mentioned 'lazy' MF global clients to which I responded although somewhat sarcastically in support of your goodself.

Perhaps you could break down my recent post to explain exactly what part of it you found idiotic ? I am merely sharing my own experience.

Surely if you know of any way to speed up this process perhaps you may like to share it with us ?

 

[Hirose Financial UK]

I was wondering what adequate procedure would be of withdrawals from the segregated account to ensure that the size of the segregated account remains matching the balance of deposits. Would it be to check the target account of the withdrawal, e.g. that it matches the source debit card/bank account of a customer, or would it be to scrutinise all withdrawals over, say, £100k?

Lplate - the treasury dept will / should be able to balance payments in/out on an intraday basis and certainly by end of day. Depending on type of business there will be scrutiny down to approx £5k for withdrawals. Money laundering regs dictate that funds go back to source.

Cookie - Supreme Court hearing. It is difficult to fathom that the SC can determine 'by a brushtroke' the method of payment to seg and non seg clients. Very upsetting for the Seg clients, less so for the non. As far as the UK is concerned does the FSCS pick up the balance and then ramp up the levy for FSA brokers next year.......yes indeed.

 

[lplate]

Lplate - the treasury dept will / should be able to balance payments in/out on an intraday basis and certainly by end of day. Depending on type of business there will be scrutiny down to approx £5k for withdrawals. Money laundering regs dictate that funds go back to source.

....
As far as the UK is concerned does the FSCS pick up the balance and then ramp up the levy for FSA brokers next year.......yes indeed.

Hirose, Thank you, though I was really asking how practically an independent body could micro-manage a check on a broker's movement of funds. Yes, the MF customers certainly were laundered - or more like bleached white!