Hi Riskapur,
Re your question ie: "I am still not clear however as to why we cannot get a partial distribution (say 50%) immediately. Yes, Deloitte are saying that some clients are claiming they are owed more than their client balances on 1 November, the closing price methodology and haircut methodology are not finalised etc But the impact of these should not drop balances in each product pool below 50% or so".
The best way to get an answer to this question is via the CC reps.
Some answers that I got from various emails I have sent / received :
1/ In terms of haircuts those of us who did not have any open positions will be treated as a seperate group.
2/ The courts are in recess for the rest of Dec & all of Jan.
3/ Next CC meeting (next Fri) should formalise the close out methodology.
4/ When the courts are open (early Feb) for business the Admin should have everything he needs in terms of reconciled accounts & a methodology. Before the end of Feb I think he will have court approval for the remittance of funds.
In terms of the court process it should be completed fairly swiftly as there is significant pressure on the Admin by both sides of politics to return our funds at the earliest possible time.
Still I would urge everyone to keep sending those emails / letters to as many politicians (on both sides) as possible.
I think that one of the reason that could prevent Deloitte to make a partial distribution is the amount of conflicting positions Deloitte has received from various clients, in particular in the futures pool.
As everyone is trying to get the best deal for themselves and "pull the bed cover to themselves", Deloitte is faced with potential litigation claims that could easily exceed the funds in the pool (ie a client with $1m in his account will make a claim for $5m or more, following the advice from his lawyer - it would not take too many such claims to suddenly represent a potential amount of claims that becomes significant); my guess is this one reason (or one valid excuse, depending on how you want to look at it) for not making a partial distribution.
One difference with the US or Canada is that most positions open on 1-nov got compulsorily closed, and/or when transferred, was done in a chaotic way as MF Global licenses got suspended. This is what has created some of the issues which now get people to seek compensation (essentially slippage issues).
While each sub-segment of clients will put very valid arguments - most of them I would agree with if I looked at them on a pure merit basis) - it is this segmented approach that is the largest threat to a seedy distribution of funds, because:
- the issues are complex from a legal perspective: for example, it makes sense to say that a cash-only account should not be penalised by a shortfall caused by margin not repatriated, it is not necessary legal, at least on the basis of the PDS and clients agreements. This will cause counter-claims of people with open positions who will disagree to let the cash-only account holders run with the money first.
This approach by segments of clients is by nature divisive, confrontational and much more prone to internal fighting among clients - which is precisely the ideal conditions for lawyers and Administrators to take over and burn all the money in fees.
I've been advocating for a simpler method looking at the updated account balances and simply distributing what's been collected.
There might be room for some negotiations, like a sweetener for the cash only account holders, eg they would be charged only 80% of the shortfall %, and the other 20% would be paid by those with open positions.
What is very clear is that any agreement among clients will be far far better than a deal resulting from a lengthy legal fight - both in terms of money left to share and time it will take to get what's left.
So we all need to take the helicopter view and ask ourselves:
If I could get 60% to 80% of my funds in 2-3 months, wouldn't that be better than trying to get 90% and in the end, realise 2-3 years later that this was an illusion, and that it would have been much better to get the money earlier.
Just as an example: a fellow trader is expecting the distribution from his funds held with Sonray - he received the notice that the distribution will be initiated soon ... it's now 3 years since his funds have been frozen.
The decision is in our hands - if we start to take segmental positions, I think we are heading in the wrong direction; it may sound like the route of more fairness, it's just a dangerous illusion.
What is 10% of one's funds compared to 2-3 years of funds frozen?