NIBA Journal

Insights, analysis, and updates from the National Introducing Brokers Association

February 4, 2013

NIBA Membership Message

Fellow brokers, “Activity begets activity”. This is a favorite phrase of mine that can be heard frequently in our office. It’s a very simple idea; it’s hardly original but very true: If you want something to happen - then start doing something. Membership in the NIBA is doing that ‘something’ that will beget growth in your business in very real, very tangible ways. Of course everyone in the IB community - member or not - benefits from the legislative, lobbying, and representational activities that the organization conducts on behalf its members. However, joining and becoming an active member in the NIBA is necessary to partake of the many benefits available in addition to these activities. One of the most important of these benefits in my opinion is the opportunity to utilize your membership in the organization as vehicle or ‘portal’ to build relationships and connections with other professionals in the...

Judge Approves Significant MF Global Settlement and Customer Distributions

On January 31, 2013, the judge presiding over the MF Global, Inc. (“MFGI”) bankruptcy approved a settlement between MFGI and its UK affiliate and also green-lighted further distributions. The trustee indicated in court that he immediately will make distributions to bring non-affiliate 4d / domestic futures customers up to a 93% level of recovery and 30.7 / foreign futures customers up to an 18% level. Additional recoveries should occur on behalf of 30.7 customers over time that the trustee expects will result in staggered distributions bringing 30.7 customers up to about 54% within a few months and then around 80% a little later. Notably, the trustee and major creditors of MFGI’s domestic affiliates have indicated in a recent court filing that they now project 100% recovery for non-affiliate commodity customers. Notwithstanding that projection from these highly sophisticated and engaged parties, the MFGI trustee appears to estimate a continued customer asset...

By NIBARead article

February 4, 2013

3 min read

New NFA Board Member Sets Goals

**NIBA asked all three new NFA Board Members to answer the question "What is the first thing you will do at your first NFA Board Meeting?" John submitted the following in behalf of James and himself. Jeff indicated he preferred to reach out to NFA members directly. First, we would like to thank those who supported our bid to represent CTAs and CPOs on the NFA Board of Directors We would also like to thank the outgoing members of the board for their years of service. NFA staff has been extremely helpful in bringing us up to speed on the bureaucratic machinery which directs the futures industry's SRO, which we greatly appreciate as well. We are taking special care to familiarize ourselves with the inner workings of the NFA, from its organization hierarchy to its committee structure. Achieving meaningful reform will require diligent deliberative efforts on the part of all...

NIBA Winter Conference in Southern California Re-Cap

NIBA Winter Conference in Southern California January 24, 2013 I recently had the pleasure of attending the “Winter” NIBA conference in Southern California. I genuinely struggled to type the word “winter” in the title, as the weather greeting participants was a balmy 70 degrees. I’m sure that there was a tussle back in Chicago as to who was going to represent the CME and NFA for this event! Complementing the SoCal weather was the choice of venue, Flemings Prime Steakhouse and Wine Bar. Anyone that knows the brand knows the restaurant’s service is first rate, coupled with great food and wine. We have the CME to thank for that! (NIBA Members attending the SoCal Winter Conference) More impressive than the venue was the subject matter covered. Opening remarks came from NIBA President, John Jensen. He brought up a great point that NIBA’s role for the IB community is not just...

Peregrine CEO Wasendorf Gets Maximum

CEDAR RAPIDS, IOWA — Disgraced financier Russell Wasendorf will be at least 107 years old by the time he’s eligible for release from prison under the 50-year sentence handed down Thursday in Cedar Rapids. The former head of the defunct Peregrine Financial Group futures and commodities brokerage stole $215 million from more than 13,000 customers over a 20-year period. The 64-year-old Marion native pilfered customer funds to live a lavish lifestyle and expand the business, which prosecutors said was never profitable on its own. Investor confidence in the sanctity of the $37 trillion futures market was shaken by details of the scam that were contained in suicide notes discovered after Wasendorf’s botched attempt to take his own life July 9. “This is a very serious offense with staggering affects to the victims and ripple effects,” U.S. District Judge Linda Reade said. “The sentence I impose must be a deterrent to...

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The Daily Electronic Confirmation of Customer Segregated Funds

February 1, 2013

3 min read

The Daily Electronic Confirmation of Customer Segregated Funds

For years, the futures industry had an impeccable reputation for safeguarding customer funds deposited at FCMs. Now, within a very short time frame, we are dealing with a shortfall in customer segregated funds at two FCMs, and their ensuing bankruptcies. Customers at both firms suffered real harm, the type of harm that all regulators attempt to prevent. The MF Global and Peregrine Financial Group customer losses are a painful reminder that regulators must continuously improve our surveillance, audit and fraud detection techniques to keep pace with changing technology and an ever-more-complicated financial marketplace. We know that we can never completely eliminate fraud, but we must continue to adopt rules and surveillance techniques to try to reduce the opportunity for fraud as much as possible. That is why the process of refining and improving regulatory protections is ongoing and constant. After the MF Global bankruptcy, NFA and CME Group in conjunction...

By NIBARead article

February 1, 2013

5 min read

A letter from NFA's CEO and Chairman

January 31, 2013 Dear Members, We wanted to send you a personal update on all that has happened in the months following the collapse of Peregrine Financial Group Inc. (PFG), and let you know that we have taken steps to refine and improve our regulatory practices and better protect you, your customers and the industry in the wake of this tragic situation. As you know, in July 2012, PFG filed for bankruptcy following the attempted suicide of its former president and CEO Russell Wasendorf, Sr., and subsequent discovery that he had defrauded PFG customers by using segregated funds for his personal gain and submitting falsified records to NFA and the Commodity Futures Trading Commission (CFTC). Shortly after we uncovered the PFG fraud, a Special Committee of NFA's public directors commissioned an independent review of our audit practices and procedures by Berkeley Research Group (BRG). As part of the review, BRG...

MF Global clients may get most of their money back

A bankruptcy court is set to consider a plan that would return 93% of MF Global customers' money. That number is an improvement on the 80% that U.S. customers had previously received. Read the full article here. The Opinions expressed are the opinions of the author. The opinions, the trading styles, trading information and trading programs are not endorsed by the NIBA, but are the individual opinions, styles, information and programs of the author.

What Is Link Building and Why Is It Important?

Whether you possess a wealth of knowledge in search engine optimization (SEO) or you’ve just heard about it in passing, you probably know the phrase “link building” and how crucial it is to your website’s success. If you don’t know about link building don’t sweat it, you’re in the right place. In general terms, search engine optimization (SEO) is the process of increasing your website’s visibility in a search engine's (such as Google) un-paid ("organic") search results. Search engines such as Google have algorithms that are applied to websites in order to rank them. The higher your page rank, the higher up your site appears in search results. Page rank algorithms heavily favor sites with many inbound links, especially inbound links from other high ranking sights (like a yahoo.com or cnn.com). (Graphical display of Google Algorithm courtesy Wikipedia) A popular and effective SEO tactic is to increase the number of...

By NIBARead article

January 30, 2013

3 min read

Some Filing Changes - NFA and IRS

In addition to the myriad of tax changes we’re facing as we go into the new year, here’s a reminder that CFTC Reg 4.27 requires all CTA’s to file a Form PR within 45 days of year end. This gives you a filing deadline of February 14, 2013 for the 2012 calendar year. This report must be filed using the NFA’s EasyFile System. Keep in mind that there is a proposal pending that this be expanded to a quarterly filing requirement. Here is the link detailing how to establish an EasyFile account Here is a link to a Form PR template provided by the NFA As we leave 2012 behind, the Bankruptcy Trustee for Peregrine Financial Group has been authorized to make a bulk transfer of approximately $123 million to Vision Financial Markets, LLC . For those of you who have clients or associates involved in PFG’s failure and subsequent...

By NIBARead article

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