Tuesday, July 17, 2012


It is hard for me to get completely clear of all of the crap surrounding the fraud situation, so here is the latest for those readers who have exposure. I spoke with a childhood fathers friend, who is a well respected professor of law at the University of Michigan, one of the top law schools in the country. I did not gain much additional insight but I am pretty clear now on one thing. Any suits against the government are not likely to succeed. Apparently there are so many prior rulings in their favor on so many things, that it is very hard to win a judgement against them. This is no surprise. We also know now that the accountant was a one man operation, so a dead end there. For those who may have contacts, or are attorney's, I think we need to find a way to go after either US Bank or JPM.

I don't know if any arguments that are reasonable are to be found with either of them, but we at least have to look there. The question is was there any negligence on the part of either of them in this matter. I do not know the answer to that. I can conceive of a few possibilities, but we just don't have enough facts yet. I think the net of all of this is, we will be fortunate when all is said and done to get half of our money back. We need to move on and barring legal action against either of those banks or someone else who might develop as an accessory, this guy just got over on us. The government will not in this matter or any other matter, protect us. I read the minutes of Gensler from the CFTC in congress, and basically he just said they can't catch all of the criminals just like the local police.

I am going to my local congressman's office today to try and get something going, but that is likely a huge waste of time. I am doing so just for closure basically. However, here is my big picture plan. Once I get back on my feet again, which could in all honesty take years, I am going to launch a public relations campaign against the regulators like nobody else has ever seen in history. It will become my mission to bring every one of them down. I will do it through this and other similar forums. Each day I am devoting just a little time to bank away some ideas about how to do it when I start it. Then at the right time, likely years from now, I will have at it. Until then, time to put this behind me. I think it is reasonable to plan on 30 to 50% back.

I have asked Trade Station to put me in touch with a management person at their bank to verify their segregated account and they are considering it. I will report the conversation if it happens.

The above chart is one possible opportunity I see, Natural Gas. I think if today's low were to be taken out tomorrow, this market could be shorted. Some of my indicators not shown, are close to turning down here.

The Bond System long was reversed to short on the opening today, losing 3/32's but producing what appears to be a big winner today. That trade indicates an exit on any open under 151'18 tonight.

That's all for today. Since I am not trading yet although that TS account is open, I don't have as much as I normally would have. My life has kind of been taken away from me, and I am focusing on a job I have now. Once whatever money comes back that is coming, it will be time to re-evaluate. I have to protect my family first and survive this, before I can be real aggressive about re-building.


Anonymous said...

Am surprised you are getting such crappy advice, u of m professor, who are you kidding, speak to a trial lawyer, and anyway forget this stupid route, Consider focusing on getting the max amount back through the bankruptcy trustee when it's available, forget about lawsuits, next time buy protection and arrange your businesses so that no party has control over the future continuation of your busuness, you should know as a veteran trader you are too emotionally unstable to trade, take a week off minimum

Anonymous said...

I read this again ,30-50%, are you just going to give up so easily, just because that's what's printed in the news, printed in the news to control weaker minds/hands to fall, aim for 100% no less

Vikas said...

Chris, probably wont be worth much for you, but offering a trading service might help a lot of readers as well as generate some income?

Vikas said...

Chris, also curious if you still think the grains are bullish here?

Chris Johnston said...

Vikas Bean Oil seems to be potentially weakening to me. However, just in general the trend is strongly up in these markets and I don't see any reason to fade them at this point. I have considered the service for Bonds since that system is doing so well.

Chris Johnston said...

The comment about the 30 to 50% is infuriating to me. Who the hell do you think I got that from? The media is not even covering this. I got that from all of the conversations I have had with trail lawyers, people on the inside in this specific case, as well as many others. I have been on the phone for hours every day with people involved in this. I don't think there are a lot of people other than Wassendorf himself and the trustee, that know more about this now than I do. The truth of the matter is that those guy has spent the money, it is gone. The assets the company has are not worth much at all most likely. Who in their right mind would listen to the media on anything?

I will require fighting like mad and staying on top of the trustee for months to even get 50% from everything that I have learned.

The Gentleman from Michigan you slam is one of the top lawyers in the country who does also have private practice. He has been involved in some of the biggest bankruptcy cases in history. There are few people on earth better qualified to explain the law in such a matter than he is.

Chris Johnston said...

As far as the comments about setting up the business differently, please email me who you bought your fraud insurance for your trading business from. I am having a hard time finding this coverage. On the other hand if you don't have any, perhaps you should retract that comment. Other than moving to Canada where the government up there covers this, I have not found a solution yet that gives protection against such an event. You apparently know more than I do in this matter if what you seem to represent here is what you have done for yourself. I would appreciate getting some insurance carrier names that could do this for me. I think now most likely if I can recover from this I will move to Vancouver where the government there will cover this. I made some calls today and did not find anyone that I know in the insurance business that knows of such policies. Maybe I am calling the wrong people?


Anonymous said...

Hi Chris, I am not the person who initially posted the comment above, but also like you I am trying to find a way to protect my brokerage account. I wasn't affected by PFG but by MF Global a few months earlier.
I moved on to Interactive Brokers, which I found to have a very robust platform, but on top of the "usual-non-sense-government-protection" they also have taken out an insurance for customer accounts with Lloyds of London. Take a look here:

Maybe this helps you in some way.

Keep fighting! I will support your efforts against the regulators in this world.


klh said...

yeah, I would really like to know who offers fraud insurance to individual investors, and at a reasonable price! and everyone should mind their tone I am a moderator of a trading board, and it is easy to offend without proper manners and with unsubstantiated assumptions.

As Chris said, Schwab apparently has it to cover themselves - I havent checked - so perhaps that is the way to go, something to demand of the NFA to do - e.g. a rule that to maintain clearing membership, a firm must first obtain compulsory fraud insurance - as an IT consultant I was required to have liability insurance for a million so this should not be onerous - and it could be something to talk to the Congressman about.



Chris Johnston said...


That insurance is only for equities accounts. It specifically states right in there it does not apply to futures or options. This is what I am finding, nada on futures accounts. That is what is making this tough to find.

The congressman's office visit was a dead end, they referred me to a dc website.

I am guilty of a bad tone in response to that comment in all honesty, I am a little touchy on this subject. However, I suspect that was from someone who is not really a trader or has some cute little layered LLC arrangement and does not understand that aside from likely not being legal, does not protect segregate money anyway. Readers can trust that I am talking to the top people available on this. Here is the best place to get a thorough explanation of the process if you are a victim.