You want to know why I hold Bankers is such disdain, and why I believe that the government is in bed with them? In August of 2007, Sentinel Management filed for Chapter 11 bankruptcy protection. Investigators found that Sentinel leveraged over $500 million in customer funds as collateral for a loan from Bank of NY Mellon. This loan was used to fund in-house speculative trading. The National Futures Association (NFA) was the auditor of Sentinel, and has admitted to signing off on audits despite not fully understanding the books or the accounting method used. The NFA admits that it didn’t audit SMG properly. However, what is most frightening is the recent ruling in the Sentinel Management Group case by the 7th Circuit Court of Appeals. The court ruled that the Bank of NY Mellon be placed first in line ahead of customers seeking the return of their money. “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 This ruling shows that not only does the Bank of NY Mellon move to the front of the line, but that using customer segregated funds as collateral is no longer considered a crime, and that co-mingling customer segregated funds with proprietary funds is no longer considered fraud. This ruling implies that customer assets held at a bank or trust are the legal property of any counterparty to loans the depository institution takes.
Posted on: Mon, 16 Sep 2013 14:10:13 +0000
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