Talk Back

Sean McGillivray, vice president at Great Pacific Wealth Management, comments on the demise of MF Global:

The bankruptcy judge overseeing the liquidation of MF Global approved a CME plan to allow MF Global futures accounts with CME positions to bulk transfer out to a possible five different FCMs along with the minimum margin requirement to hold the open trades.

What does this accomplish? Nothing, in short. Any market movement will throw these newly transferred accounts on a margin call forcing liquidation or capital contribution immediately. Welcome to your new FCM, I know you had X number of dollars at MF Global, but now you have only a small fraction of that and I need you to send in more, like now!

The real issue is that because the CME Group erratically disrupted the ability for MF Global customers to liquidate open positions and offset risk, most traders liquidated all open positions even if they did not want to. How do you have any confidence when you are told you can liquidate any open position and then when you go to do so the connection has been suspended? Continue reading…

by Jessica Holzer

Dow Jones Newswires

WASHINGTON (Dow Jones)–Securities and Exchange Commission Chairman Mary Schapiro said Friday budget constraints were hampering the regulator’s ability to enforce U.S. securities laws, in her bluntest remarks yet on the resource strain facing the agency.

Schapiro, speaking at a legal seminar in Washington, D.C., said the budget strain was forcing market analysts to use decades-old technology to “monitor trading that occurs at the speed of light.”

She also suggested that data-management systems and a digital forensics lab were on the chopping block unless Congress acted to increase the regulator’s budget.

Also, she indicated the agency didn’t have the funds to hire the market experts it needs to keep ahead of fraudsters and manipulators.

The SEC was tasked with wider responsibilities by the Dodd-Frank financial law, but Congress hasn’t increased the agency’s budget.

With Republicans back in control of the House of Representatives, the prospects for a boost in the agency’s funding have dimmed significantly.

House Republicans on Friday unveiled a plan that would slash nondefense, discretionary spending for the rest of the year by 9%, a cut of $43 billion compared with 2010 levels. The plan didn’t contain details about cuts at specific federal agencies.

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These are the personal views of Anthony Accetta, a former assistant U.S. Attorney in New York:

In the classic three-card Monte game, the hustler puts out three cards in plain sight, shows the victim one of the cards with a quick swipe and a wink, and then slips the cards in and out, ’round and ’round, in a blurring whirl of activity, until the target card is lost forever. The hustler makes his living by knowing the victim will never find the real card.

The Senate Permanent Subcommittee on Investigations, led by Sen. Carl Levin (D-Mich.), is in the process of sending the mortgage fraud card ’round and ’round.

The Senate Subcommittee has defined the Goldman Sachs card as being whether Goldman “bet against its customers” and made money by selling securities backed by bad mortgages short in its own portfolio, while selling the same securities on the open market without disclosing its bet that the securities would decrease in value. What the Senate is leaving out, however, is how did they know the securities and the mortgages backing them would be bad? That’s the wild card being shuffled right under the public’s collective nose, and the question that is not being asked.

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These are the personal views of Martin Fridson, chief executive of Fridson Investment Advisors.

Are you in favor of forcing companies to pay higher borrowing costs by making it harder for them to dispel unfounded doubts about their debt repayment capability?

No astute politician would support a proposal framed in such terms, yet that is the predictable effect of a provision in the Wall Street Reform and Consumer Protection Act (H.R. 4173), passed by the U.S. House of Representatives in December.

If Section 6007 of the bill is adopted by the Senate and signed by the President, bond-rating agencies will lose their exemption from Securities and Exchange Commission Regulation FD, also known as the fair disclosure rule.

Regulation FD bars public companies from selectively disclosing material nonpublic information to investment professionals such as money managers and securities analysts.

The exception for rating agencies has existed ever since the rule went into effect in 2000. In the interim, there has been no rash of insider trading violations traceable to Standard & Poor’s, Fitch Ratings, or Moody’s Investors Service.

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When Charles Satterfield joined Stanford Financial Group in 2005 as managing director of fixed income, he had no idea this meant peddling Certificates of Deposit.

“They wanted to tie my compensation directly to sales of the bank CD,” said Satterfield, a fixed-income investment strategist.

“When grandma came in and wanted stability and a little bit of income, my answer was supposed to be, “Oh, the bank CD.” “When a young guy came in and wanted to grow his principal, my answer was supposed to be, “Oh, the bank CD.” “No matter what the question was, I was supposed to answer, “the bank CD.’” Continue reading…

By Jilian Mincer

A DOW JONES NEWSWIRES COLUMN

NEW YORK (Dow Jones)–Compared with other financial experts such as brokers and investment advisers, the duties of certified public accountants often seem boring and safe.

But after the last year’s market meltdown and fraud scandals, boring and safe looks pretty good.

So more and more people are turning to accountants for help that goes well beyond tax advice and preparation, including budgeting for college and retirement savings.

“I think the CPA has become the trusted adviser of the current generation,” says Joni M. Becker, a CPA in Faribault, Minn. “People are starving for financial information and for somebody to help them through this.”

Accountants have the advantage of already being familiar with a client’s finances. They also happen to be eager to find new kinds of work, as they compete with low-cost tax preparers.

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