Futures Broker Refco is in Trouble
I used to have an account at Refco, but I am really glad that I change my futures brokers every few years, now that Refco is in trouble.
What really happened at Refco is still not really known.
So what did happen at Refco? I don’t know and the news probably won’t know for a while either.
My guess is the Refco trouble is probably not as bad as the news makes it appear. It’s there job to make things sound news worthy.
Since someone will probably purchase Refco’s business it will probably not end up being a big deal at all, more of an inconvenience that anything.
If more problems turn up at Refco they could locked down their accounts, and if that happens it could be months before you could withdraw your funds. During that time you probably would not be allowed to buy or sell positions either.
So if I still had my account there I would run down and close it out. Then re-buy those positions with my other broker.
You do have a backup account don’t you? I always have at least two accounts open for this very reason.
I wouldn’t submit a request to have my account transferred to another futures broker because it’s in Refco's best interest to move slowly in transferring out accounts, so that could take a month.
One time I transferred my account and open positions to a new broker, and it took a long long time. Then it also made my broker mad, I guess when you just cash out you can tell them you’re not trading anymore, and it’s no big deal. When you transfer to another broker it is a big deal and someone is stealing their business. So I will never do that again.
When you liquidate positions you are technically supposed to be able to go their office and withdraw your funds the same day, but they usually find an excuse to make you wait till the next day. Just get your money out as fast as you can.
There is a good chance that nothing will ever happen; maybe that guy will put the $400 million back and that will be the end of it, but why take a chance if you don’t have to.
That’s my advice.
Here is what the Washington post had to say about Refco:
It will be interesting to see what they are saying about Refco in a few weeks.
What really happened at Refco is still not really known.
- It didn’t go under on a huge listed futures position or the markets would have shown that quickly.
- There was no multi-billion dollar theft of clients' funds from segregated accounts.
- The $400 million or so that was taken didn’t by itself cause Refco to seek a takeover of its various businesses.
So what did happen at Refco? I don’t know and the news probably won’t know for a while either.
My guess is the Refco trouble is probably not as bad as the news makes it appear. It’s there job to make things sound news worthy.
Since someone will probably purchase Refco’s business it will probably not end up being a big deal at all, more of an inconvenience that anything.
If more problems turn up at Refco they could locked down their accounts, and if that happens it could be months before you could withdraw your funds. During that time you probably would not be allowed to buy or sell positions either.
So if I still had my account there I would run down and close it out. Then re-buy those positions with my other broker.
You do have a backup account don’t you? I always have at least two accounts open for this very reason.
I wouldn’t submit a request to have my account transferred to another futures broker because it’s in Refco's best interest to move slowly in transferring out accounts, so that could take a month.
One time I transferred my account and open positions to a new broker, and it took a long long time. Then it also made my broker mad, I guess when you just cash out you can tell them you’re not trading anymore, and it’s no big deal. When you transfer to another broker it is a big deal and someone is stealing their business. So I will never do that again.
When you liquidate positions you are technically supposed to be able to go their office and withdraw your funds the same day, but they usually find an excuse to make you wait till the next day. Just get your money out as fast as you can.
There is a good chance that nothing will ever happen; maybe that guy will put the $400 million back and that will be the end of it, but why take a chance if you don’t have to.
That’s my advice.
Here is what the Washington post had to say about Refco:
It will be interesting to see what they are saying about Refco in a few weeks.
