Sonray collapse

[skc]

This just in...

http://www.smh.com.au/business/broker-collapse-hits-3000-clients-20100623-yxd3.html

One of the country's biggest intermediary brokers, Melbourne-based Sonray Capital, collapsed at 11 pm last night, freezing 3000 client accounts.

You often hear that you need to choose your CFD provider carefully, as OTC means exactly that - you need to be aware of the counterparty risks.

I hope no one here is affected too much.

 

[Bushman]

Timely reminder of counterparty risks.

The CFD industry does not have an APRA-type regulator after all to ensure that they are fully-funded.

Hopefully the account holder rights rank above secured creditors.

 

[refined silver]

Broker Collapse - Sonray Capital Markets

Couldn't find if anyone else had posted on this.

Ouch!

"ABOUT 3000 clients of stockbroker Sonray Capital Markets have had their accounts frozen after the company called in voluntary administrators.
The Melbourne-based broker, which specialises in providing access to global stockmarkets for sophisticated retail investors, last night called in administrator Ferrier Hodgson, which addressed Sonray's staff in Melbourne this morning...

http://www.theaustralian.com.au/bus...-of-3000-clients/story-e6frg96f-1225883309728

 

[Aussiejeff]

This just in...

http://www.smh.com.au/business/broker-collapse-hits-3000-clients-20100623-yxd3.html



You often hear that you need to choose your CFD provider carefully, as OTC means exactly that - you need to be aware of the counterparty risks.

I hope no one here is affected too much.

This bit makes it sound like a Pandora's Box....

One difficulty Ferrier has is estimating the number of investors caught up in Sonray's woes. While about 3000 accounts have been frozen, some of them may be undisclosed broker accounts - effectively omnibus holdings potentially affecting many more individuals, the administrators said.

 

[refined silver]

Timely reminder of counterparty risks.

Absolutely!!

Also, the risk of whose name your assets are held in. Are they yours, fenced off, separated and held in trust by a broker/third party, or are they mixed in with intermediaries assets.

With Opes, I remember 1 guy had a $7k margin loan and $200k of his own shares he transferred over and it all belonged to Opes because of the contract wording.

 

[UBIQUITOUS]

I may be a little naive on this, but can somebody tell be if somebody who has bought shares through Sonray (no margin loan), is at risk? I thought that if there is no encumberance on the shares and they are fully owned by you, then they cannot be touched ie simply fill out a transfer form from another broker.

 

[ROE]

I may be a little naive on this, but can somebody tell be if somebody who has bought shares through Sonray (no margin loan), is at risk? I thought that if there is no encumberance on the shares and they are fully owned by you, then they cannot be touched ie simply fill out a transfer form from another broker.

depend on the nature of your link with them ..if they are just your CHESS sponsor then your shares is in your name and there is nothing they can do about it...

comsec is a good example, they are just CHESS sponsor so if comsec went belly up all shares are in your name...

 

[Tukker]

I may be a little naive on this, but can somebody tell be if somebody who has bought shares through Sonray (no margin loan), is at risk? I thought that if there is no encumberance on the shares and they are fully owned by you, then they cannot be touched ie simply fill out a transfer form from another broker.

I can't find this answer in their documentation........


There goes my holiday money

:*(

 

[Ruby]

I may be a little naive on this, but can somebody tell be if somebody who has bought shares through Sonray (no margin loan), is at risk? I thought that if there is no encumberance on the shares and they are fully owned by you, then they cannot be touched ie simply fill out a transfer form from another broker.

Hi Ubiquitous,

I don't fully understand it, but if your shares are held in an omnibus account, you may be in trouble. If you received contract notes for all your share transactions, with a CHESS sponsorship number on them, you should be OK. They are in your name and can't be touched. If, however they are held in one of these omnibus accounts (in which case you may not have received a contract note) I think you will find they are not actually held in your name - they are all lumped in together with other people's shares, and it could be bye-bye.

I always thought Sonray was a bit murky. Hope you have not lost your money.

This a very sneaky way some brokers do things, and a lot of clients are not aware of it.

 

[drsmith]

With listed securities at least, a differentiating factor might be if communications (dividend/distribution statements for example) are directly from the companies invested in or from Sonray.

 

[Trembling Hand]

Having a look at their site they have two platforms that are actually not theirs but white labeled. One is IB and the funds would not be in their hands but IBs and therefor safe, including insurance against this very thing. The other is a Saxo bank platform along the lines of the standard bucket shop model. Mostly these accounts have pooled client funds and make it very tricky extracting money.

What has to be said though is that brokers should be setup so that client funds are not part of the company that goes broke. Normally the broker company has no claim over client money, Opes prime was the exception

 

[drsmith]

I can't find this answer in their documentation........


There goes my holiday money

:*(

Section 11 of the client agreement is perhaps worthy of deeper consideration.

11. SEGREGATED ACCOUNTS
The Client agrees and acknowledges that:
i. All money and property deposited by the Client with Sonray, or received by Sonray on behalf of the
Client, shall be segregated by Sonray and invested in accordance with applicable legal and
regulatory requirements;
ii. Such segregation of the Client’s money and property does not protect the Client’s money and
property from the risk of loss;
iii. Whilst the Client’s money and property is segregated from Sonray’s money and property, it may be
co-mingled with the money and property of other Sonray clients;
iv. Unless otherwise agreed in writing, Sonray shall be entitled to retain any interest earned on such
segregated money or property held or invested by Sonray; and
v. If the Client does not provide Sonray with a tax file number or details of exemption, Sonray shall be
legally obliged to deduct tax from interest payments at the highest marginal rate plus medicare levy.

 

[robots]

hello,

so broker not really a broker but a "fund" of some description as you are depositing funds/money with them

they have ASIC license?

thankyou
professor robots

 

[freddy2]

An interesting blog post about the situation: http://brontecapital.blogspot.com/2010/06/sonray-capital-another-australian.html

 

[Ruby]

hello,

so broker not really a broker but a "fund" of some description as you are depositing funds/money with them

they have ASIC license?

Hi Robots,

Sonray is (was) a broker, and they do have (did have) an AFS licence. In spite of that, this sort of thing can still happen! Scary, isn't it?

 

[robots]

hello,

sure is, how do these companies work?

thankyou
professor robots

 

[Ruby]

hello,

sure is, how do these companies work?

'Fraid I can't help there. My understanding of how it works is too vague to be able to explain it coherently.

Ruby

 

[-Bevo-]

An interesting blog post about the situation: http://brontecapital.blogspot.com/2010/06/sonray-capital-another-australian.html

Interesting US has strict rules which segregate client assets from broker assets, feel better now having Interactive Broker account not some small aussie broker.

Feel bad for the people caught up in this, hope all works out well.

 

[Tukker]

An interesting blog post about the situation: http://brontecapital.blogspot.com/2010/06/sonray-capital-another-australian.html

Thank you freddy this blogger confirms my understanding of it.

Q. All the positions were closed by force so can we take legal action because we have been denied the opportunity. and forced to close a position

A. Liquidator will close all positions - those are not client segregated - so closure makes sense. Makes no difference - you cannot collect anyway as the positions are in the name of the broker.

http://brontecapital.blogspot.com/2010/06/sonray-capital-another-australian.html

Apparently the shares and other products where not segregated so all the assets are in the broker's name... So that would suggest sonray has the right to close them and pay creditors.

But if the company is under Voluntary Administration, not Liquidation then would they still close the positions?

MAD

 

[drsmith]

Article in the SMH today.

http://www.smh.com.au/business/blowup-hit-sonray-20100624-z3m0.html