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Chris:
There seem to be many issues being brought up at once on this thread. What
happened at Intrust was embezzlement of funds that were transferred from
that institution to InterCounty Title. (The prinicpals owend both
companies.)The following information relates to the involvement of a futures
broker:
* A certain commodity firm had a large number of commodity accts that their
clients opened through ITC. It is estimated that 70 - 75% of the cash
(103mil) in ITC cash was required by commodity trading rules to be held in
cash to back up the trading accounts of this firms client accounts
* If PWC had gone about business as they nominally had in the past there
would have been no hole to fill relative to an allocation shortage. All ITC
cash mm owners on 4-14-00 would have lost 68% of their mm asset position.
* Money managers claimed to have been told this by the receivers the day
after ITC was placed into receivership
* This would have caused the instant margin required closure all of those
commodity accts--effecting the commodity firm. At this point it is believed
that the firm went to PWC to see what they could do about resolving the
problem; which was the beginning of the across the board shortage allocation
recommendation amongst ALL the clients at Intrust.
* This infuriated the managers; whose monies were held at broker dealer
platforms outside of Intrust. This is why they formed an appellate group
to try and overturn the courts ruling about the receivership decision; and
thought the across the board shortage allocation was unfair and went against
Illinois Trust Law.
* A partner in this commodity firm is now a part owner and board member
of MTrust.
There are a number of other interesting twists and coincidences that go
beyond the scope of what is being discussed here. One is the law firm
chosen by PWC. It is said they also represented the commodity firm in the
past and there was a blatent conflict of interest between this and their
ability to represent Intrust clients. There has been a formal complaint
filed about this
by a client at Intrust but I haven't heard anything about that.
Anyway, I think what happened at Intrust relative to commodity brokers isn't
what is being discussed here. I just wanted to say the commodity brokers
didn't have anything to do Intrust going under.
Finally, PWC has another side to the story about the manner in which the
receivership was handled. I don't think what really happened will ever be
brought to light.
Chas
----- Original Message -----
From: Chris Baker <chrisbak49@xxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Friday, February 15, 2002 7:55 AM
Subject: [RT] Is there an "SIPC" for Futures Brokers?
> SIPC is the Security Investors Protection Corp., of which almost all
> stock brokers are members. The SIPC provides protection in case the
> stock broker fails. After reading the recent post on the INTRUST saga
> I was wondering why futures brokers don't have their "SIPC"?
>
> Looking at the SIPC's web site: http://www.sipc.org the SIPC seems
> to be quite busy processing investor claims from failed stock brokers.
> In fact the SIPC claims 99% of eligible investor claims are paid out.
> You can even look up the members of the SIPC to make sure your stock
> broker is a member of the SIPC. However the SIPC excludes futures,
> currency, and other transaction not under the SEC.
>
> However I gather from these INTRUST posts that the futures broker
> failed, and that the account holders at that futures broker lost some
> of their account capital due to the failure of the futures broker.
> Account holder seem to have been battling in court for years to try to
> get their capital back.
>
> So that raises the question whether futures brokers carry the same
> type of insurance as stock brokers do - in case the futures broker
> fails? For example is there an "SIPC" for futures brokers? If not
> how much of the capital for an account at a futures broker might be
> lost if a futures brokers fail?
>
>
> > -----Original Message-----
> > From: charles meyer [mailto:chmeyer@xxxxxxxx]
> > Sent: Wednesday, February 13, 2002 10:05 PM
> > To: realtraders@xxxxxxxxxxxxxxx
> > Subject: Re: [RT] GEN: INTRUST EMBEZZLEMENT - Insurance?
> >
> >
> > Hi-
> >
> > Having insurance and being able to collect on the policy
> > are two different
> > issues. There are usually limitations and exclusions. The
> > first thing the
> > insurance company will do is go to their legal department
> > and try to find a
> > way
> > out of paying the claim. It may go to court and then take years to
> > collect;
> > assuming a favorable outcome. From a practical standpoint;
> > I simply don't
> > trust this type of coverage for fraud. But what you have
> > outlined below may
> > be different from the type of fraud that can occur
> > elsewhere; and from the
> > various counter parties involved.
> >
> > Chas
>
>
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