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<DIV><FONT color=#000000 size=2>Having been a principal and chief compliance
officer of a firm in the past, it is important to remember that regulators have
net capital requirements for the firms to remain solvent. When a firm falls
below the requirement, they must notify the regulators of it and explain how
they intend to resolve it. Then the regulators need to determine if the solution
is workable and if the firm should remain operational or be shut down. In most
cases if the breach of the requirement is not severe and the firm has had a good
operational history they are seldom shut down.The breach is usually corrected
with a capital infusion or subordinated loan. This type of occurrence happens
more than one knows today, but should not be taken lightly. Most quality firms
will tell their traders and take appropriate risk measurements. Hence the rumors
start from the employees talking. This is a prudent action, however, dangerous
from a public relations stand point. When a firm fails to tell its traders, and
doesn't take appropriate measurements to curb risks, is usually when they blow
up with total surprise to the public. </FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2>Sincerely,</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2>Richard Chehovin</FONT></DIV></BODY></HTML>
</x-html>From ???@??? Thu Oct 15 11:45:58 1998
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Date: Thu, 15 Oct 1998 13:21:56 -0500
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From: "charles meyer" <chmeyer@xxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Subject: Re: Access to funds in personal accounts.
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Larry:
Was this a brokerage company, a bank, money management company
or what?
Charles
----------
> From: Zaitzeff@xxxxxxx
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> Subject: Re: Access to funds in personal accounts.
> Date: Thursday, October 15, 1998 12:55 PM
>
> Russell, re: access to your account, or any of ours for that matter.
Here is
> a personal story colored by my perception of reality: I am no legal
beagle.
> You make your own call.
>
> A friend of mine, a pilot, retired from one of the major airlines
about 6
> years years ago. He put his money from a 401K (about $1.5 million) in a
safe
> place, so he thought, with a big firm, based on a pitch from a broker. A
> month later he got a call from another broker requesting his business.
“Sorry,
> I have my money with “---”. “Oh?, I heard they went bankrupt last week.”
?
> --- / ? oops. . . yikes !!!
> The facts: Yes, the firm had gone bankrupt. NO, the firm had not
informed
> their client.
> Luckily, he had his funds in a personal account with them with no order
for
> further distribution or investment. Did he have access to funds in his
own
> account? NO!! (If you think about it, who is going to write you a check
or
> authorize a wire transfer.)
>
> The bankruptcy court froze all accounts with that firm. Even 5 months
> after the fact, he still did not have any access. He hired a lawyer (one
of my
> relatives) who had connections to some of the big banks and legal firms.
He
> had to file letters, prove source of funds and distributions; and
finally,
> certifications of hardship to even get access to a distribution of about
a few
> thousand a month, and even that was on an ad hoc basis. He was finally
able to
> get his money in a little less than a year. My friend showed me the
letters
> and paperwork - Wow!!!
> Larry Z. Seattle
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