This is a key appellate court decision - note the segregated customers funds are just a myth and your money in so called segrated accounts can be legally stolen ! Get out of brokerages now before you're ripped off if your broker suddenly fails and owes money to secured creditors.....

http://barnhardt.biz/

FULL SENTINEL RULING LINK

POSTED BY ANN BARNHARDT - AUGUST 12, AD 2012 6:51 PM MST

A reader with a Westlaw subscription downloaded this and then emailed it to me. Many thanks for that, as it is NOT published on the internet. Until now. Mwah-ha-ha-ha.CLICK HERE for the Sentinel Federal Appeals Court Ruling of August 9, 2012
This commentary came from the fellow who sent this to me. I think it is spot-on.

Miss Barnhardt,

I thought you might be interested in reading the actual opinion of the In Re Sentinel Group case, which I have attached in PDF. It was very hard to find for some reason, and I had to access my Westlaw account in order to get it. I think it would be well worth your time to read it, as I am afraid that it appears to confirm what you have been saying.

The entire case reads like an after-the-fact rationalization of a predetermined conclusion. Years ago when I was with a different firm, I worked on numerous major institutional fraud and auditing cases, and I cannot recall a ruling even remotely similar - let alone from a federal court of appeals.

Please pay particular attention to the section on equitable subordination, on pages 6 through 8. Unbelievably, the court acknowledged in that section that even though some of the bankers lied under oath during the trial, that fact did not prove "sufficiently egregious" actions on the part of the bank.

I will quote the opinion: "Instead of finding that their testimony [i.e. their lies] justified a finding of egregious bank behavior, the district court essentially found that the bank officials were such artless liars that they couldn't have been concealing deliberate wrongdoing." See page 7, column 2.

So in other words, a U.S. Court of Appeals has found that if a banker lies under oath during a trial, that fact proves that the bank was innocent of any misconduct with respect to the subject matter of those lies. Did we get transported to bizarro world without knowing it?

and Ann's piece and the comments sum things up right now....


http://www.reuters.com/article/2012/08/10/us-sentinel-appeals-decision-idUSBRE87900T20120810

(Reuters) - A ruling in the case of failed futures brokerage Sentinel Management Group could make it more difficult for customers to recoup money lost in the much larger collapse of MF Global, according to Sentinel's bankruptcy trustee.

A federal appeals court on Thursday upheld a ruling that puts Bank of New York Mellon ahead of former customers of Sentinel in the line of those seeking the return of money lost in the 2007 failure of the suburban Chicago-based futures broker.

The appeals court affirmed an earlier district court ruling that the bank had a "secured position" on a $312 million loan it gave to Sentinel, which turned out to have been secured by customer money.

Futures brokers are required to keep customers' funds in dedicated accounts to protect them from being used for anything other than client business.

However, Thursday's ruling suggests that brokerages can use customer funds to pay off other creditors, Sentinel trustee Fred Grede told Reuters.

"I don't think that's what the Commodity Futures Trading Commission had in mind" with its requirement that brokers keep customer money separate from their own, he said.

"It does not bode well for the protection of customer funds."

Worse, Grede said, is that the ruling suggests that a brokerage that allows customer money to be mixed with its own is not necessarily committing fraud.

That may raise the bar for proving that MF Global Holdings Ltd, under then-CEO Jon Corzine, misused customer funds as it scrambled to meet margin calls to back bets on European debt in the brokerage's final days. A $1.6 billion customer shortfall remains.

Corzine has said he did not know about the transfer of any customer money.

"I'm sure Mr. Corzine's attorneys will get ahold of this ruling and use it for all it's worth," Grede said.

A lawyer for Corzine, who has not been charged with any crimes, did not immediately respond to a request for comment.

CORZINE MAY STILL FACE SCRUTINY

CME Group Executive Chairman Terrence Duffy, whose firm was MF Global's frontline regulator, has said MF Global made unlawful transfers of customer money to plug its own liquidity needs.

James Koutoulas, head of the Commodity Customer Coalition, which has been an advocate for MF Global clients, said Corzine could still face scrutiny for the transfers.

The Sentinel ruling is "not an end-all-be-all acquittal for Corzine," he said.

Sentinel allegedly pledged hundreds of millions of dollars in customer assets to secure an overnight loan at Bank of New York Mellon, leaving the bank in a secured position but Sentinel's customers out millions.

Customer funds were allegedly moved from the protected accounts to other accounts so they could be used as collateral for loans to Sentinel's own trading operations.

The appeals court said that "perhaps the bank should have known that Sentinel violated segregation requirements" but agreed with the district court's earlier ruling that "such a lack of care does not rise to the level of the egregious misconduct" needed to reprioritize a claim.

"That Sentinel failed to keep client funds properly segregated is not, on its own, sufficient to rule as a matter of law that Sentinel acted ‘with actual intent to hinder, delay, or defraud' its customers," U.S. Circuit Judge John D. Tinder wrote in the ruling.

The decision was a blow for Grede, who had sought to strip Bank of New York Mellon of its secured position.

Sentinel, whose customers are missing about $600 million, largely managed money for other futures brokers, delivering outsized returns that, Grede says, were juiced up by improperly using customer money to secure loans that went to fund risky trades.

The scheme unraveled when the credit crisis hit in the summer of 2007.

and don't expect any help from Regulators - they are all in these schemes together with the banksters....

http://www.silverdoctors.com/geithner-admits-under-oath-he-failed-to-report-known-libor-fraud-to-the-doj/#more-11319

GEITHNER ADMITS UNDER OATH HE FAILED TO REPORT KNOWN LIBOR FRAUD TO THE DOJ

AUGUST 11, 2012 BY THE DOC 10 COMMENTS

Treasury Secretary Timothy Geithner was forced to admit under oath during his July 25th testimony that he failed to report known LIBOR mis-reporting fraud to the DOJ.
When pressured by Congressman Brad Miller, D-NC, who asked Geithner about his 2008 report on LIBOR , Geithner admits he was aware that criminally fraudulent LIBOR submissions were made, and yet he did not report any of the criminally fraudulent occurances to the DOJ.

Full interrogation below: fast forward to 3:30 mark for the fireworks:

h/t AlexanderHigginsblog