Andrew Abraham

andy-0101 My name in Andrew Abraham. I have been investing in commodities and managed futures since 1994. I adhere to the philosophy of trend following. Trend following stresses a disciplined approach to commodity/ futures trading. Successful trend following and commodity futures investing requires patience, discipline and actively managing the risk. What sets me apart from other traders is that I am not only concerned about the return on investment but how much risk I will have to tolerate to achieve my goals.

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Futures and commodity trading involve substantial risk. The evaluations of futures and commodities may fluctuate and as a result, clients may lose more than their original investment. In no event should the content of this website be construed as an express or an implied promise, guarantee or implication by, that you will profit, or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible, where projections of future conditions are attempted.



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The Scandal of the MF Global over “investment” of client segregated funds

An email to a Bloomberg Reporter from Stuart McCellan a UK Trader

With regards to the Mf global bankruptcy and the scandal that is brewing over “investment” of client segregated funds


everyone on the journalist side is jumping up and down about missing funds and are chasing red herrings ,they don’t get what has happened.
only one so far gets it
R Lenzer at Forbes

it is simple , the money at MF Global is missing because it was lost as a capital hit on “investment” of client funds that has proven not to be worth the original sum invested .It is NOT ACCOUNTING ERRORS or the fact that the money is somewhere else. It has been lost because the principal value returned on liquidating the investment was less than the sum invested,both because the assets (foreign bonds) were worth less than they paid for them AND (probably) BECAUSE there was fx risk .investment was in euros and the client funds are in dollars

futures gcm,s are allowed to make a bet on fixed income and fx, on behalf of their clients segregated funds with a free option for the benefit of the firm not the clients ,they can choose to pass on some income benefit to their customers if they like
you do not need to be a proprietary trader to make the bets
this is perfectly legal and allowable to expose clients funds to exposure without their knowledge
it is CFTC regulation rule 1.25

many financial institutions such as J P Morgan (mf global bank) advertise
“regulatory cash management services” and will actively seek these accounts and relationships and encourage the “investment ” of these funds. As risk free returns have dropped the nature of these investments has changed in the search for yield and capital gain to boost returns
In greater or lesser degrees it is common practice amongst all GCm,s

These gains , either income or capital DO NOT BENEFIT the clients , they benefit the firm,but as now is public the risk is with the client

this is a massive loophole in the financial system integrity and many like Corzine know it and use it and yet clients are generally ignorant of it .They believe their segregated funds are safe
It has been common knowledge at the CFTC (allowance under the rule has existed since 1974) and the futures industry has lobbied extensively NOT TO HAVE IT CHANGED despite some in the CFTC trying to get change, Chilton the most vocal .Of course Gensler and his cronies at Goldman and Wall Street do not want it changed as it is a huge source of revenue and trading for them and their firms

Yet again the small man gets f—–

You must publicise this as loudly and frequently as you can

Stuart Mcclellan

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1 comment to The Scandal of the MF Global over “investment” of client segregated funds

  • beijingyank

    It’s a nice try but it doesn’t pass the smell test.

    “A federal official says MF Global, the securities firm led by Jon Corzine, admitted to using clients’ money as its financial troubles mounted.”

    Now playing arbitrage over the weekend with free account balances is completely different to using clients funds to make bets on the account of the firm.

    Were we really talking about the firm purchasing physical bonds? Apparently not, because the funds were not taken out of the client’s account at the time of regular way delivery. It was taken out of the account when the margin call forced the liquidation of the leveraged position, and the purchases would not have taken place if proper collateral was not in the account. This is where Corzine comes in. He pledged the clients assets as his own.

    We talking about a drunken awol sailor with a fist full of Benjies in a leveraged derivative whore house playing craps with other people’s money. This CFTC regulation rule 1.25 is suspect and counters other rules against the commingling of client and firm money.

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