Ann Barnhardt has been involved professionally in the futures industry for some time and was hit hard by the collapse of MF Global. She has been on a mission ever since and I applaud her. The industry is broken and needs some legitimate attention. Fortunately, it seems the PFG Best failure has reignited her passion in digging up dirt. From Ann via Jesse Cafe Americain:
“The National Futures Association needs to be sued into the ground by all of the PFGBest customers, as well as many of the NFA employees PERSONALLY.
In 2010 I was audited by the NFA, which is a bi-annual (every two years) occurrence for Independent Introducing Brokers. The NFA tried to tell me that a commercial hedge broker could not execute more than one round-turn per client per cash inventory cycle.
Yes, I kid you not. They actually tried to make that argument. As in a feedlot or rancher who is hedged with short futures and has a big open profit on the hedge MAY NOT exit that short futures and buy puts in order to manage that position. Or, if a hedger has an option position that has a big open profit, the hedger may NOT roll that option position into a different strike price in order to capture equity and protect against time value erosion.
The NFA actually tried to argue that it is against the law for a hedge broker to transact more than one round-turn per cash commodity inventory cycle. Again, I can’t make this crap up. I have all of their stunningly ignorant letters to prove all of this.
But here is the point, and anyone out there who is a PFGBest customer or an attorney representing a PFGBest customer needs to listen up:
The same “Senior Compliance Manager” who signed off on the PFGBest affadavit and who is listed on the NFA website as both the “Director of Audits/Investigations” and the “Director of FOREX Compliance”, Lauren Brinati, is the same woman whom I and my attorneys dealt with two years ago.
Now, hold on to your pantyhose.
One of my attorneys in the Schuyler Roche Crisham firm in Chicago, as livid as I was by the NFA’s galactically stupid contention about hedgers being limited to one round-turn per cash inventory cycle, called Lauren Brinati to discuss the NFA’s position. Lauren Brinati said that she couldn’t discuss the matter with my attorney directly because:
“I don’t actually understand any of this stuff. I just sign whatever comes across my desk.”
Lauren Brinati, June 2010″
I encourage you to read this post in its entirety. There needs to be a catalyst to force change within the futures industry as a whole. Let’s hope the combination of PFG Best and MF Global will suffice.
Although it may be nice to read what Ann and Attain Capital write, there simply needs to be action. Hopefully a legitimate lawsuit can be brought on parties that have hurt the industry as a whole. I look forward to watching this unfold.
From what I hear, our May 2012 ratings report on Zero Hedge has created quite a stir in the industry. Let’s hope this is just the beginning of positive material changes.