MF Global Australia - What are you doing?

[Trader101]

Thanks hatton01
For the update but when I called mf global the answers I got were very different. First the MF Global staff who answered my call did not agree with DELOITTE policy of not paying out the cash they have on hand.

Secondly the estimate time frame for distribution were not expect till after march.
Thirdly there a lot of cfd fx (money which is part of the CFD pool that is current held by MF global Singapore.

In my view we have 2 options 1 wait and hope that DELOITTE pay s eventually, not confident that this will happen or 2 take action as client in the US did.
I recommend that we take the following action get a list of all the creditor representative that were appointed at the credit meeting: I know Jim Taig is one (pls add to this list)

2nd form a group of clients as a action group. We can collect all the emails on this forum and also ask the IBs such as seismo to send to their distribution list.

3rd decide our demand, we would demand DELOITTE pay out 50% of the client balances. (my personal view is that all current account should be value at the date that MF global went into administration. We can just work of the GLV as at 3rd of NOV , this will save DELOITTE time in checking the accounts. Say if the cfd balance is 100 mil and DELOITTE collects 80 mil then they need to pay 80% more. If the collect 10 more mil then they distributed that and we make a general claim with the other creditors for the remaining 10.

I think this is the most fair approach as everyone equally share any loss, no client is responsible for the MF global disaster so we should equally share the loss. Otherwise the legal cost of arguing over position will be huge and no one will get anything. Open to suggestions on this.

4th we can organize a public campaign (once we get a pool of 500 clients and family members )against DELOITTE and any counterparty that refuses to pay.
We can have meetings, organize protest send mass letters to MP etc. citing US as an example

 

[hatton01]

Hi Trader101,

I was just sent this link by Brent.

http://finance.fortune.cnn.com/2011/12/02/james-koutoulas-mfglobal-bankruptcy/

I think it would be a great idea if we can get a distribution list of MF Global Aust clients & a dedicated website to collect signatures.

Even host our own private webinar so we can form a view of what the majority of clients want ?

Would Jim be willing to do the above ?

I agree the first demand must be a partial distribution of funds on hand asap. We definitely dont want to end up in the courts.

Still waiting for the next update.

 

[Trader101]

Thanks what do you think of using the closing the balance on cob of the 2 nov (time of adminstrtion) rather then pay accounts to go through all the accounts and getting excat fills

 

[hatton01]

My view is that if you were in cash position then you should not have to wear open position losses. When you look at how the margin's were operating at MF cash positions like mine were funding other traders margins. At IG the house funds provide the margins. Now to ask me to also bear some of those losses does not sound very fair or ethical to me.

 

[skc]

To me the use of GLV on 2 Nov to determine payout is not the most fair way, but it is the most efficient way.

Take an example of someone who has a small account and abuses the leverage of CFDs... say he was long 1000 BHP at $35 which needed only 5% margin or $1,750. He had $2000 in his account and on 2 Nov his GLV was $2000. Then DB closed out BHP at $34. His position suffered a $1000 loss and his account is worth $1000 - and that's how much he should get back. If this account gets paid out 80% on 2 Nov GLV, he will receive $1600 and be better off at the expense of others. I think that's Deloitte's point and while it is valid it also suits their incentives to take their sweet time.

IMO accepting the DB close out price is just part of trading. Sometimes you get a nasty fill to no fault of your own, but you have to live with it. And in reality, someone will be slightly better off as a result of the fills as well. If that someone was you, you wouldn't be complaining.

The right way to balance the accounts is pretty simple IMO. Say across all clients there were 20,000 long BHP and 10,000 short BHP... I assume DB would simply sell the net 10,000 BHP and achieve a close out price (say $34 VWAP). Then everyone with an open position on BHP gets that same close out price. It would be silly to work out which parcel of DB's trade relates to which particular account's holding.

This is why I don't understand how it takes so long. A couple of analysts with a few spreadsheets will be able to calculate the net exposure across all the accounts for all the securities (actually pretty sure MFGA will have the information at hand everyday). Then you take the information from DB and calculate the average close out price for each security, enter that into the system and you get the account balances. It really shouldn't take more than a week or two, unless these highly paid vocational students working for Deloitte don't know how to use Excel yet.

Having said all that... if DB or Deloitte wants to play games and drag this thing out, I am OK with getting a partial distribution (say at least 75%), and have this process be more efficient while sacrificing some fairness.

So my proposed action would be:
1. Ask Deloitte for an explanation of the close out process (and why it's taking so long).
2. Agree a deadline to the account balancing process - say another 4 weeks.
3. Distribute available funds to account holders based on result of the final balances.
4. If correct account balances cannot be determined due to whatever excuses DB/Deloitte have, make a partial distribution based on GLV on 2 Nov.
5. Continue the account balancing process and claw back funds from other counterparties.
6. Pay out remaining funds to those accounts with excess (and ask for money back from those accounts that got more than their fair share from the partial distribution).

This way we get to attempt some fairness, without letting this drag out forever.

 

[hatton01]

Well finally the email I was promised has arrived with some timelines.
The timeline for the return of funds is not good March/April 2012.

 

[Nick29]

Can someone explain to me why MFG UK is attempting to claim MFG Aus futures segregated cash. How is that possible?

 

[pifouSyd]

I response to Hatton01, riskapur, skc and others

1) the only 2 objectives hurdles preventing an immediate distribution of funds are:
- the remaining unknown liquidation prices (should not be too many by now)
- the agreement on a fair allocation of the liquidation prices, when the range of prices for a given instrument is large ; the simplest and fairest way to do this is to use a weighted average
2) as soon as we can have an agreement on the method to calculate the fair average price of liquidation, the distribution should start straight away.
Simplest way to distribute the money:
- we settle all accounts that had opened positions with a weighted average price
- we distribute the money collected - less a provision to deal with special situations - using a pro-rata of the account balances. This should not take 3 months.
What has Chris Campbell been waiting for to ask the Court for directions if he can't decide by himself? The issue was there on 11-Nov, what has been done since?
3) until the methodology is approved, make a provision and start the distribution of the money collected so far (less the provision). Surely Deloitte is capable of coming up with some reasonable provision.
4) hatton01 - while I understand why you would be reluctant to suffer a haircut if you had no positions opened, by nature the segregated account is co-mingling clients funds, and all clients are in the same boat. Harsh perhaps, but it's what's written in the PDS
5) I don't think you could reasonably expect to get 100% of your money back - I would hope you would prefer to get 80% in a few weeks rather than an hypothetic 100% less ... less... less... (after accounting for Deloitte fees and lawyers fees) in a few months
6) Remember, Deloitte's approach will always be the one that maximises their fees - the more divisive, the more complex, the better
7) I can't see how the absence of a compensation fund would prevent Australia to proceed with rapid distribution like in the US - we might not get 100%, but it does not mean we could not get 50%-70% very soon
8) the financial, social, economic and mental impact of delaying the payment of funds should by far outweigh the need for an 100% fair mechanism. I'm sure for many of us speed is more important than absolute fairness (as long as it remains reasonable of course).
I know of a single Mum with 2 kids who is in a desperate situation. We should all keep in mind that there are people that may be ready for desperate acts if they don't get their money very soon, before attempting anything that has the potential to delay proceedings
9) we are currently building a web site ready to collect clients details (email addresses) and donations to fund court action if necessary. A large client is trying to organise a meeting of clients next week - there is an initiative in progress to get clients together to ensure that our interests are properly considered.

 

[Trader101]

I have spoken to the hotline and it appears the cost of the adminstration cost is not decreasing at all.

I think there is 2 path that we need to progress along, firstly we need to get through to the commitee of creditors. these people of some influence over the adminstrators as they approve the adminstrator's pay. We need to demand that the adminstrator makes a 50% repayment on all accounts based on the GLV value as at liquidation.

Secondly I think we need to have a more public campaign so that we can lobby all the members of parliment to increase the pace of the payouts and pressure other custodians. I think we can get some parliemnt time via the Green and independant. I mean there must be 20k accounts so petenailly 60k people affect by this issue.

we need someone to get some story about people that are really doing it tough as much detail as possible and get it into the media. Finanly please post an email of someone that is willing to collect all the clients whom are demanding a immediate partial distribution.

 

[banco]

I would suggest you contact Senator John Williams. He's the one who got the recent senate inquiry into the corporate insolvency industry started. He loathes the bastards.

The other one to contact (particuarly if you are a constituent) is David Bradbury MP. He's the one with responsibility for corporate insolvency in the Government.

I should add a note of skepticism: ASIC is a notoriously lazy regulator in this area and I can't see them putting any pressure on Chris Campbell unless something he is doing is obviously wrong. The Courts also tend to defer to the judgement of the administrator.

 

[Garpal Gumnut]

This is beginning to turn in to a Storm Financial thread.

I reckon you will be fortunate to get 50% of your funds backs, lawyers, accountants, brokers etc. will take the rest.

Keep up the fight.

gg

 

[hatton01]

Hi Pifousyd,

I think at end of the day to expedite the process we are in right now we need "maximum impact".

To give you a example of what I mean whenever I ask someone at work, a social occasion or church if they have heard of MF Global very few say "Yes". It was a news item for a few days & things have now moved on.

Politician's, ASIC, Radio stations are just as useless. Our emails are probably sitting in someone's deleted items folder. No one ever replied to me.

This forum has been invaluable for all us to toss idea's on the best way to get our funds back. But that's about it.

However we now need to get out there & show as ourselves as a "community of traders" who have lost there funds & now being messed around by the big end of town & not getting any where fast.

We should now target one of the Counterparties who still have our funds (ASX,DB), ASIC, or the Administrator that is keeping our money & not doing enough to return it ASAP. Timing is crucial perhaps on a day there is going to be news about John Corzine ? Newspaper ad (will be happy to place one in Brisbane), Twitter, Social media to inform clients. A couple of messages about what is it we want like "we want our money back now" & return of our funds from the counterparties.

At the protest we can collect the hundreds of email addresses for further action.

As for a website one on the lines of the following would be great, a single one would be better with the Aussie equivalent of James Koutoulas.

http://commoditycustomercoalition.org/

I know Brent is close to getting one up. Maybe you could have a consolidated one (Jim Taig + Brent + the futures traders association -the article in Herald or Age may help to track them down).

This is not a "Storm financial" we know where our funds are!

Only my thoughts. And thanks for doing something about our worst nightmare.
Happy to help in any way.

 

[pifouSyd]

Hatton01 and Trader101 and all
We are now a core group of clients with similar views, and mostly aligned to what I've read on this forum. A website is soon to be launched. Hoping to be able to set up a clients support group, to assist in priority the clients in desperate situation. Protest in front of MF Global office, which happens to be also Deloitte's office is also on the cards.
I can share more if you email me at private.futures.trader@gmail.com

 

[Trader101]

That sounds good - does any one have a contact detail for jamie clinnick - he was ex mf global employee now on the creditors commitee -very smart guy

If we can get Jamie and jim taig in our group then we have 2 member of the creditor committee, and some say over approving pay for administrator

 

[redbin]

Interesting reading.
http://newsandinsight.thomsonreuter...d_the_great_Wall_St_re-hypothecation_scandal/

 

[mmis4168]

http://www.bloomberg.com/news/2011-...illion-customer-transfer-amid-objections.html

have a look at British Unit paragraph. Does it mean we have no chance to get any money from US units and if it is a case, from no other units in the world as everyone is going to protect its own clients?

 

[pifouSyd]

The first story is scary (anyone with an Interactive Broker Account should read it).

The second story is bad news but hardly surprising - politicians may claim that Australia
and the US are best friends, but obviously friendship quickly find its limits ...
Hope this does not affect the $34m owed to Australian Futures clients and held by the ASX. This will be an interesting test for our regulator (ASIC), politicians and our Justice system to prove that they are here to defend Australians.

 

[mmis4168]

I response to Hatton01, riskapur, skc and others

1) the only 2 objectives hurdles preventing an immediate distribution of funds are:
- the remaining unknown liquidation prices (should not be too many by now)
- the agreement on a fair allocation of the liquidation prices, when the range of prices for a given instrument is large ; the simplest and fairest way to do this is to use a weighted average

I would rather say it was the administrator who decided not to distribute early.

2) as soon as we can have an agreement on the method to calculate the fair average price of liquidation, the distribution should start straight away.
Simplest way to distribute the money:
- we settle all accounts that had opened positions with a weighted average price
- we distribute the money collected - less a provision to deal with special situations - using a pro-rata of the account balances. This should not take 3 months.
What has Chris Campbell been waiting for to ask the Court for directions if he can't decide by himself? The issue was there on 11-Nov, what has been done since?

The problem is we need the agreement. I would prefer the most fair solution - not the simplest one.

3) until the methodology is approved, make a provision and start the distribution of the money collected so far (less the provision). Surely Deloitte is capable of coming up with some reasonable provision.

hard to imagine honestly. The methodology is the key. how to treat the account worth 20000 AUD with one open DAX contract with margin of 13000 AUD and gain, lets say 1000 AUD, when margin is somewhere in UK or US? are you going to share the margin cost amongst the traders (PDS)? or debit the holder (the risk she/he took opening the position)? and 1000 gain? return 50% of the funds? and later when we agree to charge the holder a margin cost, we would ask him/her for return of few thousand? come on...

As we have, would have or at least we can "create" closing prices, debiting the acc holders for gains/losses on positions and their margins suppose to be on the cards.

4) hatton01 - while I understand why you would be reluctant to suffer a haircut if you had no positions opened, by nature the segregated account is co-mingling clients funds, and all clients are in the same boat. Harsh perhaps, but it's what's written in the PDS

The nature of segregated account, the law and regulator said that my money was safe. And yours too. I have spoken with MF Global about it, ASIC was on guard, politicians. The system was safe. And even if something unimaginable happens, I would get it back. I have not read PDS. but I am pretty sure you have not too 6 weeks ago. and 6 weeks ago you would not agree to take losses of your fellow traders, just because "'s written in the PDS".

5) I don't think you could reasonably expect to get 100% of your money back - I would hope you would prefer to get 80% in a few weeks rather than an hypothetic 100% less ... less... less... (after accounting for Deloitte fees and lawyers fees) in a few months

so are you suggesting of fast agreement on your conditions (a weighted average) or we have to struggle?

6) Remember, Deloitte's approach will always be the one that maximises their fees - the more divisive, the more complex, the better

it is clear for everyone here

7) I can't see how the absence of a compensation fund would prevent Australia to proceed with rapid distribution like in the US - we might not get 100%, but it does not mean we could not get 50%-70% very soon

You are kidding. I do not know the numbers, but if you pay some acc holders too much now, later it will be impossible to take it back and pay the others. look at example with dax contract.

8) the financial, social, economic and mental impact of delaying the payment of funds should by far outweigh the need for an 100% fair mechanism. I'm sure for many of us speed is more important than absolute fairness (as long as it remains reasonable of course).

for many 100% fair mechanism is a priority. I am not sure if it exists, but I would prefer to spend 1 or 2 extra months to find it.

I know of a single Mum with 2 kids who is in a desperate situation. We should all keep in mind that there are people that may be ready for desperate acts if they don't get their money very soon, before attempting anything that has the potential to delay proceedings

I am overseas, with no job and couple of 000's AUD in my bank account. Have no means to return Australia. Had to take a loan from my family overseas to survive. I was full time trader - pretty bad one as I have lost almost everything in a such stupid way.

9) we are currently building a web site ready to collect clients details (email addresses) and donations to fund court action if necessary. A large client is trying to organise a meeting of clients next week - there is an initiative in progress to get clients together to ensure that our interests are properly considered.

unfortunately I can not help you guys in Australia, but thanks for your effort and hard work.

 

[skc]

for many 100% fair mechanism is a priority. I am not sure if it exists, but I would prefer to spend 1 or 2 extra months to find it.

This is the crux of it, isn't it?

As much as I like it to be fair (my account was practically all cash), I would take a 20% haircut now if it means I can get my money back 6 months earlier than the 100% fair method.

I will live with 1 or 2 extra month, but a line needs to be drawn somewhere.

 

[hatton01]

Hi Skc,
In terms of the CFD pool we now have 80% of our funds back (ie: missing 17Mil from the 84 mil)

Whats outstanding is 7 mil from various MF Global O/S branches & the $10 mil Db has held back due to (slippage (7Mil) + Counter party setoff ($3 mil) against losses in other MF Global O/S branches.

There is a meeting between the MF Global & DB back offices to help reconcile the data & I would assume the Admin would then know the account balance for every customer within 2 weeks (extra time given as some of the Deloitte's staff cant use Excel!).

Let say for argument sake out of the remaining 7 Mil we dont get back another 2 Mil due to slippage.

So for cash only CFD clients the loss is $3mil or 3%.
For open positions (worst case where they had open position across all counter parties) the loss would be 7 + 3 + 2 or 14%.

I think to implement such a method the Admin would have to go to court to ensure a Judge approves the Admins distribution method.

3% - 10% or 14% is much better than taking a 20% haircut.