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Hello All,
Taking issue on the LFG thread, there is the theoretical side, and the practical
side to dealing with the rumor:
Theoretically, the rumor mill, and the unfounded scares are indeed an annoying
thing, in particular for the firm involved. I can understand some taking issue
with this.
On the practical side of things, I know what it is to have one's life savings
stuck in an account of a leading, reputed and solid 200 years old brokerage firm
that went belly up overnight through fraudulent action of its officers. Money was
in segregated accounts, and in cash, but it still took two years of lawsuits to
get it gack, and during most of that time, prospects were really dim. We are
talking here of a 100% drawdown. Yes it was not prudent to have all assets at one
firm, no we don't do this anymore, but it is that the small initial account had
grown steadily over the years, and this firm was as established as one could be.
So what?
In trading, one spends endless hours, months, years, to figure out trading
systems, entries, money management, psychology and the rest, but nothing can work
if your money is no longer yours, so if I smell fumes, I am the hell out of there.
That is called a stop loss.... Sorry for the firm, but I just can't afford the
downside.
Just as trading is not about being right, but about being with the flow, keeping
the account, is not about being right, it is about staying alive, and being able
to trade again.
This is my view, but of course, you may do as you please, not my problem.
Best to all of you
Gwenn
ALVIS2JS@xxxxxxx a écrit:
> RTers,
>
> Most traders on this forum world agree that spreading unsubstaniated rumors or
> acting impulsively in response to such rumors, can both have negative
> consequences. However, these unusual times require more than usual caution.
> The risks of futures trading are not always limited to having positions in
> highly leveraged markets that can be dramically effected by unexpected events
> like the failure of a large hedge fund or yesterday's actions by the Fed.
>
> In 1990, my then broker (and friend) called one morning a 6AM to advise me to
> direct him to close my account and to immediately request the wire transfer
> return of my funds. He had heard informally, that Stotler and Co., a large
> FMC supporting many IB offices and retail clients, could no longer meet their
> financial requirements and was potentially insolvent. The rumor proved true.
> I got my money and was able to open an account with another firm with
> minimal interuption in my trading.
> Regulators stepped in and as I recall, all segregated customer funds were
> eventually returned. But Stotler did not survive.
>
> Whatever the situation at LFG ( I have no knowledge and make no judgement),
> traders may wish to review their account papers and the boilerplate language
> that often describes your firms obligaions in case of insolvency. I am not an
> attorney but am aware that once the Trustee In Bankruptcy takes control of a
> business, release and full recovery of one's assets can be a problimatic and
> lengthy process.
>
> My expirence suggests that traders should be as concerned with the financial
> strength of their brokerage firm as they are with its commissions and
> executions. And, if necessary, be prepared to move quickly to potect your
> assets. As we are lately reminded, being a large firm does not immunize you
> against making large mistakes.
>
> Regards,
> James Alvis
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