Client Protection
Posted: Mon Jan 23, 2006 2:37 pm
I currently have an account with Refco.........and may transfer it to Man Financial. What an absurdity - you need to open a different account and fill out all the forms again, even though Man owns the Refco futures division.
But my objection is with Man's Client Agreement. Every single clause is drafted for the protection of Man Financial. Not one single clause states that a client's assets will be segregated or even what the general statute law on segregation is. Not one single clause mentions any safeguards for the client. Fine, US securities law may well provide such protection but Man offers not a scrap of guidance on what such protection might be nor one scrap of comfort that they are complying and will continue to comply with any such laws.
Take a look at Clause 8 for instance:
"Within the limits of applicable law and regulations, you hereby authorise us to lend either to ourselves or to others any securities or other property held by us in your margin account together with all attendant rights of ownership, and to use all such property as collateral for our general loans. Any such property, together with all attendant rights of ownership, may be pledged, repledged, hypothecated or rehypothecated either separately or in common with other such property for any amounts due to us thereon or for a greater sum, and we shall have no obligation to retain a like amount of similar property in our possession and control."
So, what are "the limits of applicable law and regulations"?
Even if my account contains 98% US T Bills, prima facie Man seems to have the power to borrow them from me thus leaving me as an unsecured creditor of Man Financial.
I wonder what the "applicable laws and regulations "have to say about this?
How would you feel if you had been an unsecured creditor of one of the many bankrupt divisions of Refco?
But my objection is with Man's Client Agreement. Every single clause is drafted for the protection of Man Financial. Not one single clause states that a client's assets will be segregated or even what the general statute law on segregation is. Not one single clause mentions any safeguards for the client. Fine, US securities law may well provide such protection but Man offers not a scrap of guidance on what such protection might be nor one scrap of comfort that they are complying and will continue to comply with any such laws.
Take a look at Clause 8 for instance:
"Within the limits of applicable law and regulations, you hereby authorise us to lend either to ourselves or to others any securities or other property held by us in your margin account together with all attendant rights of ownership, and to use all such property as collateral for our general loans. Any such property, together with all attendant rights of ownership, may be pledged, repledged, hypothecated or rehypothecated either separately or in common with other such property for any amounts due to us thereon or for a greater sum, and we shall have no obligation to retain a like amount of similar property in our possession and control."
So, what are "the limits of applicable law and regulations"?
Even if my account contains 98% US T Bills, prima facie Man seems to have the power to borrow them from me thus leaving me as an unsecured creditor of Man Financial.
I wonder what the "applicable laws and regulations "have to say about this?
How would you feel if you had been an unsecured creditor of one of the many bankrupt divisions of Refco?