"THE WAITING IS THE HARDEST PART" - TOM PETTY
One of the things I have turned to recently is music. Do not get the impression I play music, I am talent less in this area other than a little guitar playing. I meant listening to it. I used to have the TV on the back ground in my office, generally ESPN or the 50th viewing of Underworld etc.. My wife is a Fox News whore. Don't worry I tell her that to her face. We have our great room adjacent to my office with of course what most guys have, the biggest Flat screen that could possibly fit on the wall! She always has Fox news on. I get tired of it, and particularly in these troubled times for all us PFG victims, I find it difficult to listen to all this political babble. It is all that BS that resulted in us all getting screwed. It also most likely stands in the way of anything every being done about making sure this does not happen again. It will happen again, and soon is my guess. It will be a different methodology, but it will involve the use of Segregated funds once again in an inappropriate manner that results in them being lost and the investors getting screwed.
I did come across an article yesterday that addressed the impatience of people like us who have had our money stolen. We are about at the point where in the MF Global case, people got their first distribution of money, yet we are seemingly nowhere near that in any way here. For those who felt that in the wake of MF this one would be handled more quickly, they could not have been more wrong about that. I spoke with a friend yesterday who was aware of the situation but not that my money was there, and he told me he was surprised at how calmly I was talking to him about it. My response was that there is really nothing I can do at this point. That is not exactly true.
I had a very nice long chat with a reporter yesterday from Thomson Reuters about all of this stuff. They have apparently been looking into this for a couple of weeks. She was very nice, and although they have not really uncovered anything yet that the rest of us do not already know, her focus in this matter was impressive to me. They know how to ask the right questions, and to get to the truth. I felt relieved when I got off the phone because I felt that I now knew someone who was looking out for us. There has just been such a total lack of information of any kind on this, it has just left a very eery feeling. You know the saying, "no news is good news." I don't think that is true in this case. In case she happens to read the blog today I want to say thank you PJ so much for trying to help us. I will say here what I said to you directly, you are the best hope we have in this matter.
The trustee is solely motivated by money here, so we can trust him I think to go after whatever he can, he just makes more money that way. I think the whole matter boils down to the following issue. When the money was wired to JPM then passed through to US Bank what happened on that trail? How did it get taken out of a Segregated account and into his personal hands? Here is a excerpt from Rosenthal Collins about what they do in accordance with segregated account regulations
In compliance with segregation requirements that are applicable to futures, and options on futures referred to above, RCG does the following:
- Customer funds are maintained at banks in clearly identified "segregated funds" accounts separate and apart from any other funds of RCG.
- Each bank signs a written acknowledgment that (i) the segregated funds are held in the account in accordance with the Commodity Exchange Act and CFTC regulations, and (ii) the bank will not hold, dispose of, or use any of the segregated assets for anyone, including RCG, other than the RCG customers.
- The assets of one customer at RCG are not used to purchase, margin or settle the trades or positions, or to secure or extend credit, of any other customer.
- RCG will invest segregated assets only in funds guaranteed by the United States or other allowed instruments. Investments may include U.S. Treasury securities, municipal securities, government sponsored agency securities, certificates of deposit or money market mutual funds.
- Segregated assets are only invested through, or deposited in, customer segregated funds accounts.
- RCG keeps a daily record of customer segregated funds and assets
- Every business day, the total amount of customer assets required to be segregated and the total amount of assets actually deposited in segregated accounts is calculated as of the close of the previous business day.
I have highlighted in red where I think our hope lies. Although this is not a copy of the law, it appears to reflect what the law requires in the handling of segregated money. If in fact this is the law and a bank signs an agreement to handle the funds this way, there is no question at all that the bank has violated this regulation. First if JPM is the pass through for Segregated money, and they are forwarding it to a non-segregated account that appears to be a violation of the law. Second, assuming they forwarded it to a segregated account, how did it get taken out of that account by PFG or king douchebag himself? Neither of them are eligible by what is written above, to have access to the funds.
The bottom line in this case, if this is in fact a clear statement of the law in these matters, guess who is culpable here..... US Bank! If we have a clear path to sue them, and this is the law, we can release the balloons here. If they have breached that law for this many years, we can take them down, and they have the money to pay us. I am surprised that there is not one single thing I can find on the web talking about the Bank's actions in this matter, NADA. WHY?
I have been told that this local bank in Iowa was acquired by US Bancorp. If that is true, it is likely there was a pre-existing relationship between DB(douchebag) and them that went back a long ways. They probably knew him so well they relaxed many of the rules in handling his accounts. This is typical of friends I know who are wealthy. They have banking relationships at the branches, they are well known to the people, and they get different treatment. However, in the matter of segregated funds, it is my view that the relaxation of the requirements of the handling of them, is a clear violation of the law. I am sure the forensic accountants will find the money trail, and I am hopeful that it will show these laws were broken. If they were we will pile drive this bank into submission together. Until we know the exact path the money followed we cannot be sure on this matter. I am sure the trustee is looking at this because he gets paid a percentage in this so the bigger the recovery, the more money he is going to make.
The one final point to make on this is, I am not sure if the above is what Rosenthal requires specifically, or it is a direct requirement of the regulations placed upon the banks. I have tried to find this on the web and I am just getting caught up in a bunch of legal jargon that iritates me.
On to the markets. It does appear to me that we are at an interesting inflection point in many places right here. The retracements in the down trends have gone far enough now, that the trends are on the verge of changing to up. However, if we roll back down here, the trends will be re-asserting themselves.
Here is Crude Oil and you can see from a COT perspective, this has been pretty well setup for a move up for a few weeks now, and we have gotten one. As everyone knows, COT buying often is very early, but in this case it picked the low almost exactly to the week it was made. Now we have bounced up a good bit, so the easy money on the buy was made. In reality it is never easy buying into drops like that and I do not do it. When I look at the daily chart next, I see more of an inflection point type of situation than what I see above on the weekly chart.
Here the picture looks a little different. It is not bearish in my view at this point, but would become so if that trend line I have drawn in there were to break on a closing basis. If we do take out the highs of last week, we could be off to the races here. Many markets look just like this now to me, so this will just be a proxy for the rest of them. One thing I do find interesting, is how much this is lagging the stock market in recent weeks. That makes me lean a bit more to the down side for whatever that is worth.
I am going to be up and trading again next week. Mentally I was just not really ready until now. I have been working diligently on some new things, and they are getting close to being ready for prime time. The Bond system is being rolled out now for subs at the beginning of the month. As I said, I do not have Pay Pal setup yet. If it gets rolling and a lot of people decide to give it a whirl, I will re-open my other web site. I am not going to the expense of that at this point in light of what has happened to me with PFG. Also, I know some of you do not live in the US, but I am not going to give out my account numbers for wiring. There is no way in light of what has just been taken from me that I can risk that for only $60 a throw. I am sure most of you can understand that.
Have a great weekend