My Dear Friends,
The Sentinel Ruling is now a legal precedent. In bankruptcy of your bank, broker or fund, you can find your assets in the majority of cases are backing the liabilities of the entity in front of yourselves. This is why you must act to protect yourself.
No one in this financial world is going to do it for you, and few will have the courage to recommend you escape Street Name. The Sentinel Ruling is the law and you can wake up one day and find out that your investments are gone.
The insurance programs will function as long as the incidents of bankruptcy are isolated events.
In a systemic collapse the insurance funds are not capitalized to meet the potential obligations. The guarantor you are relying on will have to be bailed out.
For securities there are only three ways to hold them:
1. Street name.
2. Direct registration.
3. Certificate form.
Anyone advising you to stay with the Street Name option is a babbling idiot not interested at all in your welfare.
In street name the inferred ownership is the broker or bank, not you. In Direct Registration and Certificate form, the distinct ownership is you.
In 99.9% of the cases of retirement accounts the answer is you are in Street Name.
How are your securities held? Do you even know? I dare you to ask!
Do you know what your broker’s capital ratio is? Find out as that number is the order of magnitude at which your broker is gambling on with primarily your money. I dare you to ask.
This time around those investors that are too lazy to consider protecting themselves will be demolished.
How would you like your gold shares at $3500 gold, outperforming gold, and one morning you wake up to having nothing anymore? It is because of the Sentinel Ruling that you now are behind the back burner in a bankruptcy situation with any fiduciary.
The system and their minions will do everything to keep you trapped in Street Name. Articles will be published trying to put you back to sleep on this issue.
Wake up, please.
Sentinel ruling may hurt MF Global clients
By Tom Polansek and Ann Saphir
CHICAGO | Thu Aug 9, 2012 8:18pm EDT
(Reuters) – A ruling in the case of failed futures brokerage Sentinel Management Group could make it more difficult for customers to recoup money lost in the much larger collapse of MF Global, according to Sentinel’s bankruptcy trustee.
A federal appeals court on Thursday upheld a ruling that puts Bank of New York Mellon ahead of former customers of Sentinel in the line of those seeking the return of money lost in the 2007 failure of the suburban Chicago-based futures broker.
The appeals court affirmed an earlier district court ruling that the bank had a "secured position" on a $312 million loan it gave to Sentinel, which turned out to have been secured by customer money.
Futures brokers are required to keep customers’ funds in dedicated accounts to protect them from being used for anything other than client business.
However, Thursday’s ruling suggests that brokerages can use customer funds to pay off other creditors, Sentinel trustee Fred Grede told Reuters.
"I don’t think that’s what the Commodity Futures Trading Commission had in mind" with its requirement that brokers keep customer money separate from their own, he said.
"It does not bode well for the protection of customer funds."
Worse, Grede said, is that the ruling suggests that a brokerage that allows customer money to be mixed with its own is not necessarily committing fraud.