Maybe the better way is to buy Treasuries with the cash and have them put in your name instead of street name.

Pietertv1 wrote..

. . . risk is highest with your cash balances, versus securities. Brokerages will deploy your idle cash. And its likely parked regularly at a TBTF bank.

I must disagree with the "risk is highest" part. For example, AmEx parks cash balances of my brokerage accounts at TBTF banks in what appear to be individual FDIC insured accounts in my name. Further, these accounts are distributed into smaller accounts to numerous banks to avoid the FDIC limit issues.

Unless I completely misunderstand what they are doing and how, it seems to me that that is less risky than the brokerage retaining all my cash balance money in-house.

Hmmmm,

I wonder if there is some beneficial differentiation between parking +$$$$$$$+ in Vanguard's Treasury mutual funds vs their brokerage accounts????

You cannot trust any financial institution. If you don't have physical possession, then you don't own it.

Has there ever been any evidence at all to substantiate the position that non-margin accounts are vulnerable?

gotta maintain the "nobody committed any crimes" mantra

Tickerfan, only tangentially, e.g. MMFs.

Fraudster said "You cannot trust any financial institution. If you don't have physical possession, then you don't own it."

I think when this global Ponzi implodes, we are going to find out how true that is.
:(

This is a bit nitpicky, but this is an appeal of a civil proceeding, not a criminal case. It is strange the judge even used the term "criminal". That said, this ruling is extremely disturbing. I am actually home from the beach to close my scottrade account out. Haven't made a trade since cashing out the last of my puts in 2008, only was keeping some money in there for the "short the phone book" moment, which hasn't materialized. Having this article on my phone will make the explanation so much easier. Karl's ticker with that video of HFT volume over time was the actual last straw for me.

Edit: The Judge actually never says crime or criminal, he states their there was no intent to defraud in this case.

Think you should change the thread title it is misleading.

crazy news from the US.

Quote:

Edit: The Judge actually never says crime or criminal, he states their there was no intent to defraud in this case.

Fraud is a crime, is it not? If the judge says "no intent to defraud", that's just another way of saying "nobody committed any crimes".

yes, but I mean it is unclear why he even bothered to say it in the context of a bankruptcy proceeding. The article is poorly written. Would there have been some sort of insurance payout in the instance of fraud?

Regardless it is unacceptable that trading counterparties were paid before clients with (un)segregated accounts.

Edit: hmm, how come I can't delete the whole post? I see now that I am not reading this from my phone in the middle of the night - the judge is saying that Mellon (whose overnight loan held senior position) commited no fraud, not that Sentinel didn't commit any fraud. This ruling may not be as bad as I originally thought, tough to know without all the details. Was it normal for this company to take out large overnight loans?

I don't see how that helps Corzine at all. very strange.

You can delete the post by re-titling it "bilge," but don't do that. This bears watching.

I totally see your point Obs, if the TF iniated can't parse this type of story, how is the average person: "Well I guess Corzine shouldn't be in jail, we need some new laws then"

Why isn't Romney hammering Obama over Corzine? Oh right.

I just meant my reply JStanley

Oh, sorry. Got ya. You didn't even start the thread, lol.

"I'z canz readz..."

Quote:

My other assumption is that the risk is highest with your cash balances, versus securities.
Brokerages will deploy your idle cash. And its likely parked regularly at a TBTF bank.
In the environment we are envisioning though, I can't of too many securities where I'd be comfortable parking my "inactive" trading balances for any duration.

If I remember correctly, it was the cash and Treasuries in the MF Global customer accounts that got taken, not actual positions in stock(?) or futures contracts. So, I think you are correct, but the highest risk is not only with cash balances, but also with Treasuries. Also, I thought I remembered a story about customers losing access to the gold that they had stored with MF Global - maybe it was Celente?

Super_z wrote..

the judge is saying that Mellon (whose overnight loan held senior position) commited no fraud, not that Sentinel didn't commit any fraud.

Actually, the judge IS saying Sentinel committed no fraud:

Quote:

"That Sentinel failed to keep client funds properly segregated is not, on its own, sufficient to rule as a matter of law that Sentinel acted ‘with actual intent to hinder, delay, or defraud' its customers," U.S. Circuit Judge John D. Tinder wrote in the ruling.

And how can Mellon's loan be senior to customer claims in the first place when BK rules state that customers have priority claim over all others? Someone needs to explain that one to me.

I'm sorry Obs. Obviously I made numerous errors in reading comprehension, I think because this whole thing is so incomprehensible. Maybe my brain was trying to make this appear somehow sane. This judge has to be on the take, absolutely disgusting, up is down, black is white.

Here is his wiki bio:

"John Daniel Tinder (born 1950) is a federal judge on the United States Court of Appeals for the Seventh Circuit.
[edit]Background

Born in Indianapolis, Indiana received a Bachelor of Science degree from Indiana University Bloomington in 1972, and a J.D. from the Indiana University Maurer School of Law in 1975. While in law school, Tinder worked at the U.S. Attorney's office in Indianapolis during 1974, and he became an Assistant United States Attorney for the Southern District of Indiana in 1974, a position he stayed in until 1977.
In 1977, Tinder entered into private practice in Indianapolis, which he continued in until 1984 when he returned to the United States Attorney Office in Indianapolis, this time as its leader. In addition to his work in the private sector, Tinder served as a public defender from 1977-1978 for the Marion County Criminal Court. From 1979 to 1982, Tinder was chief trial deputy for the Marion County Prosecutor's Office. He was the United States Attorney for the Southern District of Indiana from 1984 to 1987, and was also an adjunct professor at the Indiana University School of Law from 1980 to 1988.
Tinder was nominated to a judgeship on the U.S. District Court by President Ronald Reagan on June 2, 1987, to replace Judge James Noland on the United States District Court for the Southern District of Indiana, and the U.S. Senate confirmed him just two months later on August 7, 1987. A detailed and revealing interview of Judge Tinder can be found on the blog "Underneath there Robes" at http://underneaththeirrobes.blogs.com/ma.... A similar but shorter interview can be found on the Indiana Barrister Blog at http://www.indianabarrister.com/archives.... He is listed as a distinguished alumni of Brebeuf Jesuit Preparatory School in Indianapolis, Indiana here: http://en.wikipedia.org/wiki/Brebeuf_Jes.... and as member of the Indiana University School of Law (Bloomington) Academy of Law Alumni here: http://www.law.indiana.edu/alumni/awards.... Brief video interviews can be found on the Seventh Circuit Bar Association web site here: http://www.7thcircuitbar.org/displaycomm....
[edit]Seventh Circuit nomination and confirmation

After twenty years of service as a trial judge, Tinder was nominated on July 17, 2007, by President George W. Bush to replace Judge Daniel Anthony Manion on the Seventh Circuit bench. Manion had previously indicated he would assume Senior status upon confirmation of a successor Tinder's hearings before the Senate Judiciary Committee were uncontroversial, and he was voted out of Committee to the Senate floor in November 2007. He was confirmed on December 19, 2007, by a vote of 93-0, almost exactly five months after his nomination. He was the second and last judge appointed to the Seventh Circuit by Bush and confirmed by the United States Senate."

http://en.wikipedia.org/wiki/John_Daniel....