Australian (ASX) Stock Market Forum

MF Global Australia - What are you doing?

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Nick29 said:
How can the prime broker request money from segregated Australian accounts?
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I phoned MFGA which can still be contacted on 1800 626 099 I was told that the australian arm was successful, however clients funds all depend on the decision the prime broker makes.
The big problem is that we dont know the position of MFGA hedge position when they were forced to close positions.
 
matt07 said:
I phoned MFGA which can still be contacted on 1800 626 099 I was told that the australian arm was successful, however clients funds all depend on the decision the prime broker makes.
The big problem is that we dont know the position of MFGA hedge position when they were forced to close positions.
Click to expand...

I think there is a difference between CFD accounts and futures accounts. Futures accounts are segregated so it's not there money in the first place. Deloitte have control of that. From memory I think CFD accounts are not segregated although I'm not totally sure.
 
matt07 said:
Totally agree...

Just spoke with MFGA clients expect email in about 30mins
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Still awaiting email. Just spoke with service provider, they confirmed a conversation with MFGA Adminastrators this morning.

monies showing in your service providers account should be correct. and the administrators still will not give a specific time frame on when funds will be released.
 
The administrators commenced their investigations shortly after their appointment at 7:45am on 1 November 2011. From their investigations to date, it is apparent to the administrators that the affairs of the companies in the MF Global group are complex and the administrators' investigations may take some time.
The administrators will keep all clients and other counterparties informed of developments.
The first meeting of the creditors of the MF Global group companies is expected to be held on Thursday 10 November 2011 in Sydney. The administrators will confirm the meeting details in accordance with the Corporations Act 2001 (Cth) (Corporations Act) shortly. The administrators will provide a detailed report into their investigations to date at that meeting.
In the interim, the administrators have received a large number of queries from clients and other concerned parties. The purpose of this document is to provide answers to the key queries which have been raised for the benefit of all concerned in the administrations of the MF Global group companies.
Click to expand...

Full text http://www.deloitte.com/view/en_AU/...ation/businessesunderadmin/mfglobal/index.htm

Cheers
Sir O
 
Mildly positive news.

THE Australian arm of failed broker MF Global was in the black when its directors pulled the plug, the administrator says.

But Chris Campbell, of Deloitte, said he was unable to guarantee that clients would get 100 ¢ in the dollar because he had yet to secure funds caught up in the group's complex global web.

He said the company had 20,700 client accounts, although ''people will have multiple accounts'', and he had so far secured ''just under $160 million'' in cash.
Advertisement: Story continues below

''The overall reconciliation that the company did every day prior to our appointment, and is being updated for the day of our appointment, shows a positive reconciliation.

''In other words, there is a surplus in total.''

Read more: http://www.smh.com.au/business/mf-g...full-return-20111103-1mxta.html#ixzz1cgP4HhmG
Click to expand...
 
I was up at night trading when the events all unfolded overseas and was horrifed at the announcement as I trade FX and CFDs full-time as a career. Unfortunately this is a sad example of what can happen to traders who utilise CFD providers. I really hope that everyone receives their money back in full and as soon as posssible.

This should be a huge lesson to all involved in trading derivatives:

1. Don't get sentimental with a provider - at the end of the day they are in business because of us.

2. Transfer money out on a regular basis - when I decided to commence trading full-time I set up a business, received an ABN and opened up a business account with the CBA. Each day I transfer all profit out of my client account into my business account leaving only a small amount of capital for the following days trading activities. If I need more I simply deposit it in online instantly. There's really no excuse for having money "sit" in a providers client account not doing anything.

3. Regardless of all of the above, by its very nature trading leveraged instruments involves a significant amonut of risk. To be 100% safe, only put in your client account what you can afford to loose.

4. If this can happen to MF Global, it can certainly happen to other smaller firms. Look for "big" providers. There is only one CFD / FX provider in Australia that 100% uses it's own money for hedging and 100% segregates clients funds in a separate Australian bank account(1). Look for sneaky terms in a providers PDS. Reference to a segregated account when required by The Corporations Act does not mean a provider is doing it out of goodwill. In the case of MF Global Australia, page 2 of their most recent PDS issued on 1 October 2010 states clearly:

"It is therefore important for you to note that even though your money may be paid into one or more segregated accounts, this may not afford you absolute protection. First, within the segregated account, all client funds are pooled together and so an individual client balance may not be protected if there is a default in the overall segregated account balance. Secondly, if you have incurred Margin obligations to MFGA, your client funds will be paid to MFGA to meet those obligations. Thirdly, to the extent that MFGA has used client funds to meet obligations incurred by MFGA in respect of its hedging activities referred to above, there is an exposure to counterparty risk in relation to both MFGA and, indirectly, to its Hedge Counterparty, in relation to those funds. For these reasons you are exposed to the risk that you may not receive all money to which you are entitled if there is a deficit in the client money account and MFGA becomes insolvent or is otherwise unable to pay any amount owing to you.
You will receive account statements (see section 7.2 of this PDS). The statement will include information such as cash balances and Free Equity. You should note that a reference to a positive cash balance or positive Free Equity does not mean that MFGA holds all or any of that amount in a segregated account."(2)

Again let me say how sorry I am to all who have lost money in this crisis. To be honest I thought a lot more people would be on this particular thread and I'm glad to hear that MF Global Australia are at least answering client enquiries and by the sounds of things it looks as if you will be seeing at the very least your initial capital paid back.

(1) http://www.igmarkets.com.au/cfd/strength-security.html
(2) https://invest.etrade.com.au/cms/assets/mfglobal_pds_cfds_october_2010_01.pdf
 
Watch out for any bank, Institution or organisation that is involved directly or however indirectly with Greece, Portugal, Spain or Ireland.
The total Greek debt sums involved are between $450 - $500 billion.
French debt exceeds $57 billion, Germany $34 billion and UK $14 billion - these are debts owed by Greece and retail banks only.
 
I've received an email from Brent Penfold, an Australian newsletter service provider who is also caught up in the MF Global collapse. This reprints his email in full.

Please contact Brent on:

bpenfold@tpg.com.au

if you wish to be involved in fighting for your money back.

MF Global Australia’s (MFGA) Demise and Administration

Dear Traders,

First of all this list is a new list I have created from my contacts for the sole purpose of distributing communication concerning MF Global Australia’s (MFGA) demise and administration.

If you would not like to receive these “MFGA” emails then please elect to unsubscribe from this new list of mine at the bottom of this email.

… if you are interested then please read on ….

If you are either a direct MFGA account holder, either through a futures, CFD, forex account etc, or an indirect account holder through third party brokers who used MFGA like E-Trade etc …. and just as importantly … if you are either a trader with another broker or a client advisor or even an ex-MFGA client advisor and therefore part of our wider trader community and who are interested in helping to ensure a good outcome for us MFGA client customers …. then please keep reading as I’d like to request your help … where you can provide it.


Vote to Remove Greedy Deloitte as Joint Administrators
In a nut shell I’d like to request your help to encourage as many MFGA account holders who still have money tied up with MFGA like me to attend Friday’s creditors meeting and vote to REMOVE Deloitte as the Joint Administrators.

I say this as they are estimating their fee for the first month of “administration” at being $1,100,000!

If you can attend the meeting it's being held this Friday 11 November 2011 at 10.30am at the Sofitel Sydney Wentworth, Main Ballroom, 61-10 Phillip St, Sydney NSW 2000.


My Personal Situation
Before MFGA fell over I traded with two futures brokers.

At MFGA I held (and I still hold) three accounts that between them have over AUD166,000 in funds.

Since the 28th October the accounts have not held any open positions.

While the funds are frozen the Administrators continue to earn interest at my pleasure and I’m unable to access them. You, like me, would be understandably upset with this situation.

And talk about maximum adversity, I’ve just learnt that overnight Moody’s in the US have placed my other broker on a credit rate watch for a possible downgrade! Gee ..I can’t seem to win a trick! :eek:(


Are Customers Also Creditors?
I have received a number of emails enquiring whether I would be attending the creditors meeting next Friday in Sydney. I replied that no I wouldn’t be as I considered myself a “customer” and not a “creditor”.

But that got me thinking.

On Friday, like every other MFGA account holder, I received a barrage of emails, enough to make my eyes glaze over. After receiving these emails I read over them a second time and could not find a clear instruction from Deloitte, the Administrators, about clearly defining what a “customer” should do?

This made me suspicious.

I wasn’t totally convinced I was a creditor and that I should attend the meeting however I was disappointed there was no communiqué that said …”…if you are a client there is nothing for you to do at this time but wait until our next contact…”.


Greedy Deloitte’s Fee: $1,100,000 per month or $55,000 per Day
Anyway I kept reading the emails and came across “Initial Remuneration Advice to Creditors” with Chris Campbell’s (one of Deloitte’s Administrators) saying…..

“ …My best estimate for my remuneration for the first month of the administration could be in the vicinity of $1,000,000 plus GST…..”

My jaw dropped.

$1,100,000 for four weeks work, meaning they believe after one week’s work they are already owed $275,000? …. That’s $55,000 a day!

I then came across their hourly rates …

Partner $650, Senior Manager $525, Manager $370, Senior Analyst $280, Analyst $240, Graduate $185, Support Advanced secretarial skills $185 and Vacationer $185.

And let me convert that to an annual salary, if we assume there are on average 40 hours a week for a 48 week year. That would make1,920 hours.

Partner $1,248,000, Senior Manager $1,008,000, Manager $710,400, Senior Analyst $537,600 Analyst $460,800, Graduate $355,200, Support Advanced secretarial skills $355,200 and Vacationer $355,200.

Well how about that a Vacationer, or an under graduate as they are defined, is being billed out at an annual rate of $355,200! I think that is only a little less then what the Australian Prime Minister is paid and at least she is a fully qualified lawyer!

It’s just staggering, insulting and scandalous that they feel they can freely and shamelessly charge those rates. Simply bewildering, unbelievable and shocking.

So to paint a clearer picture … if I’m seeing this correct Deloitte are estimating that they will be billing over 4 weeks and possibly beyond at $6,875 per hour ($1,100,000 divided by 160 hours in a month). If we total all the hourly rates above for one “Administrative Team” that consists of 8 people their hourly charge is $2,620. To fit that into their $1,100,000 estimated monthly fee which equates to an estimated hourly fee of $6,875 would require 2.6 Administrative Teams or 20.8 people, lets say make it 21 people working full time on the Administration!

Extraordinary.

If there wasn’t a slight to good chance that part of my funds could be used to pay a part or whole of Deloitte’s greedy hourly rates I’d be laughing my head off thinking it was comedy hour or looking at my calendar to make sure it wasn’t the first of April. I’d be thinking these clowns can’t be serious? Surely they can’t be serious in saying they believe an undergraduate is worth $355,200 (on an annual basis) to a successful Administration of MFGA? Surely they can’t be serious in believing creditors would approve such a rort?

But I wasn’t laughing.

For heaven forbid, if account holders (like me) are not assured of receiving 100% of our account balances, then we’ll be chipping in for Deloitte's outrageous and excessive ambush invoicing. Make no mistake. Account holders will be paying if we’re not assured of 100% of our account balances as Administrators are God, Judge and Jury in their own special land of administration …. but only if we let them.


The Penny Drops
And then the penny dropped on possibly why they were so vague about what “clients” should or could do given our situation. On whether or not “clients” should also consider themselves as “creditors”?

And that’s because at the Creditors Meeting on Friday creditors can vote to remove the Joint Administrators from office.

I can imagine that Deloittes would not want their gravy train taken away so quickly.

I can imagine that Deloittes would not want to give every account holder, if indeed clients can be defined as being a “creditor”, the power to vote against their appointment. And that is because there are apparently over 20,000 accounts with MFGA and even when there are multiple account holders like me, I’m sure the net number of account holders would still out number the traditional creditors.


ASIC’s Definition of a Creditor
From ASIC’s website I found the following definition of what is a “creditor”;

You are a creditor of a company if the company owes you money. Usually, a creditor is owed money because they have provided goods or services, or mde loans to the company.

Please refer to;
http://www.asic.gov.au/asic/pdflib.nsf/lookupbyfilename/receivership_guide_for_creditors.pdf/$file/receivership_guide_for_creditors.pdf

Well I suppose our situation isn’t “usual” however I know I’m certainly owed money.
 
Sonray’s Clients Were Treated as Creditors
And in Sonray’s administration clients were treated as unsecured creditors!

“…Clients who are creditors of Sonray will be able to participate in the voluntary administration process….”

Please refer to;
http://www.ferrierhodgson.com/en/Current Matters/Corporate Recovery Matters/Sonray.aspx

and click on “First Circular to Creditors Published: 25/06/2010”

[For those not familiar with Sonray it was a broker that specialised in online and advisory services in global equities, futures, CFDs and margin foreign exchange. Due to fraudulent activities of senior executives the business was placed in administration in June 2010 and later its chief executive jailed. The Administrator closed all the open positions and froze the accounts of Sonray's 3000+ clients.]

So in Sonray’s administration clients were seen as “creditors”.

Another interesting fact from the same document is the comparison of estimated fees.

In the document you will see Ferrier Hodgson’s estimated fee of being between $300,000 and $400,000 for the whole administration, not just the first month.

What’s interesting is how familiar their respective business were and yet how disparate their estimated fees are.

Sonray and MFGA are very similar as they both dealt in the same financial markets and instruments both locally and internationally. In my mind there are only two differences between MFGA and Sonray. MFGA has more accounts which in today’s electronic world doesn’t mean a proportional increase in fees. The other is that many of MFGA’s international counter parties where also part of the MF Global group. But such differences to my mind don’t suggest or warrant a three fold in estimated fees.


Shame On Deloitte for NOT Clarifying Clients’ Position
This lack of clarity on what clients should be doing and whether or not clients should also see themselves as “creditors” should be enough to disqualify Deloitte as Joint Administrators at Friday’s creditor’s meeting. Shame on them for their clever casualness.


What You Can Do – Vote To Remove Deloitte As Joint Administrators
And this is why I’m sending this email.

If you, like me, believe Deloitte’s extraordinary estimated fee of $1,100,000 per month is excessive, not justified, not commercial and reeks of exploitation and fee gouging.

If you, like me, believe there is a real chance the Administrators will not hesitate to access “client” funds to pay their fees when they discover MFGA net’s equity is not enough to pay their Wall Street invoices.

If you, like me, believe there is a slight chance that the administration could possibly drag out like Sonray’s continuing saga has since June 2010 where Deloitte’s estimated monthly fee will grow beyond to an annual fee of $13,200,000.

If you, like me, have read that apparently MFGA had recently paid a $4m dividend payment to the US implying MFGA’s cupboard would be pretty bear and lean to pay for the Administrators estimate $1,1000,000 monthly fee.

Then you, like me, would be able to see how vulnerable our account balances are to pillaging by Deloitte … because they aren’t going to administer MFGA for free.

If you , like me, would feel more comfortable in supporting a more commercially orientated Administrator and therefore would like to vote to remove Deloitte as the Joint Administrator then please consider taking the following actions.


Identify Yourself as a Creditor - Complete the Informal Proof of Debt Form
If you are an MFGA account holder, ex-client advisor or a traditional creditor or simply someone that MFGA owes money to, then regardless of where you live you must first fill out the “Informal Proof of Debt Form”.

Don’t be casual and believe you’ll be looked after.

Just like in trading, you need to take responsibility for your own destiny and not rely on the favours and goodwill of others.

To do this you’ll need to go to the following link, download and print the pdf which is much clearer then the email they sent out.

https://www.deloitte.com/assets/Dcom-Aus...rs_3_Nov_11.pdf

I suggest you fill out one form for each account you hold and attach a print out of your last trading statement (or pay slip if you’re an ex-client advisor).

And then keep a scan or photocopy for your records (and remember to bring it along if you intend to be at Friday’s creditors meeting).

What they don’t tell you clearly is that we have to lodge our Informal Proof of Debt Form with the Joint Administrators BEFORE the Creditor meeting on Friday 11th November.

So you will need to do this now and mail it on Monday to the following address;

Christopher Campbell
Joint and Several Administrator of MF Global Australia etc
Deliotte Touche Tohmatsu
PO Box N250 Grosvenor Place
Sydney, NSW, 1219.
Australia.

If you’re an MFGA account holder/ex-employee
If you live in Sydney then please consider attending, bringing along your copy of your Informal Proof Of Debt Form and make sure you arrive 45 minutes (9:45am) before the meeting to get yourself marked off and admitted. And when the item comes up for consideration vote for the removal of the Joint Administrators!

If you can’t attend and you’d like a proxy to cast your vote and you haven’t got one then I’ll be happy for you to appoint me as your proxy, as long as you feel comfortable with this. If so then please fill out the “Appointment of Proxy Creditors Meeting” form (and remember you still have to fill out the “Informal Proof of Debt Form”).

You’ll then need to mail the original on Monday as well (along with your Proof of Debt) to;

Christopher Campbell
Joint and Several Administrator of MF Global Australia etc
Deliotte Touche Tohmatsu
PO Box N250 Grosvenor Place
Sydney, NSW, 1219.
Australia.

And it's important for you to mail the proxy to the Administrators as apparently

…”..proxies must be made available to the Joint Administrators..”

If you would like to appoint me your proxy please either scan and email (bpenfold@tpg.com.au) me your proxy or place a copy in the mail also on Monday morning to;

Brent Penfold
70 Kingston Street,
Haberfield, NSW, 2045.
Australia.

If you’re not an MFGA account holder but a friend of the market, either as a trader or client advisor, please forward this email to as many people you know who hold an account with MFGA. Please let them know about Deliotte's planned excessive fees.

And if us little people are able to make our voices heard at Friday’s creditors meeting and we’re successful in stopping this unsightly stampede to the advisors feeding trough and we halt Deloitte in their tracks then we’ll be able to have a say in the appointment of a more commercially orientated and fair minded Administrator.


Can We Make a Difference?Are Customers Also Creditors?
It all comes down to the question of whether or not clients are also creditors?

In my opinion I think we are.

However I can certainly be wrong.

But as trading successfully and profitably is more about successfully risk management and being a good loser then finding that perfect entry or exit technique …so is the decision we now face.

Do we consider ourselves as just “clients” and do nothing, or take a chance and consider ourselves as “creditors” as well?

I know that filling in the forms and either attending Friday’s creditors meeting or sending in a proxy may turn out to be a waste of time however what is there to lose but a little of our time in our attempt to manage our risk whether they be real or not? And although I’m not a lawyer or anyone familiar with the intricacies of administrations I do know Sonray treated their clients as unsecured creditors and ASIC defines creditors as anyone who is owed money.

My suggestion is to strongly consider erring on the side of conservatism, fill in and lodge the forms and attend or organize a proxy to vote for the removal of Deliotte as Joint Administrators …. the cost to us will only be the time, effort and frustration we put in to getting it done.


Thank You
If you’re still here with me I’d like to extend a big thank you for taking an interest in hearing my thoughts on this matter.

I don’t see myself as an activist however I feel I can’t stand idle and see such a calamity that has fallen upon us MFGA account holders be compounded by the unbridled ambition and greed of Deloitte.

And please remember to unsubscribe from this list (see below) if you would prefer not to receive any MFGA type emails from me.


Some Good News?
And to end by sharing what looks like some promising news … it could just be hopeful speculation but here’s an interesting article at the following link … let’s hope there is some currency to it …. But incase there isn’t … lets aim for removing Deloitte as Joint Administrators at next friday's creditors meeting.

http://www.reuters.com/article/2011/11/05/us-mfglobal-asia-idUSTRE7A40RJ20111105



Yours sincerely.


Brent Penfold
MFGA Account Holder/Creditor
Futures Trader & Adviser
ASIC AFSL No. 225946

bpenfold@tpg.com.au
 
There was a Senate inquiry into corporate insolvency in 2010 (hasn't led to any changes). But the standard MO is for the administrators to take huge fees and to drag it out for years in order to faciltate their feeding on the carcass. I think Ansett is still being administered.
 
I too have a fair amount of funds tied up in an MF Global client account. :banghead: I can also relate to the exorbitant fees that Delloite are proposing to charge.

My only concern here is that the administrators will currently be in negotiation with potential bidders for the remaining business, and by voting Delloite out could jeapordise the success of these opportunities.

Also I have been through an administration process as an employee (Nortel, with EY as administrators) which is still not resolved and know that these fees are not unusual.

I am not decided either way at present so any comments would be appreciated.
 

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