Larry Williams on MAN financials and market outlook. HERE'S THE...

Larry Williams on MAN financials and market outlook.

HERE'S THE LATEST ON THE MAN FINANCIAL FAILURE

It seems to be good news...

This story is taking more form; my sources say the CME finished their audit and most funds have been accounted for. Some 15,500 retail accounts and 1.5 billion in assets were transferred out Friday night to other firms.

The claim will be an error took place at a low executive level; 1 Billion was transferred out of segregated (protected customers funds) into Man house accounts. The suspicion is this was used for a Man Financial position...short 3bn in Italian Bonds!

Jon Corzine claimed to be unaware of the position. Once he found this out, at approximately 3am last Monday, he personally got on phone and bought back the 3bn worth of Italian bonds they were short.

He then files for chapter 11, then stays on to work out of the trade until it settles Wednesday and Thursday, resigns Friday.

The problem was a huge bet using 30 to 1 leverage. I guess the bet was to offset his comment a few years back that MF Global was "too small to care about". The bet size changed all that!

The hope is this should be happy ending... unless regulators and lawyers tie up the funds in litigation and compliance.

*****This just announced by the CME*****
"By reducing the initial margin "ratio" to 1.00, we ensure that margin calls that are issued to these transferred MF Global customers will be limited to bringing their accounts into compliance with the lower, "maintenance" margin levels. This is a short term accommodation to maintain market integrity and provide temporary relief to customers whose accounts have been disrupted by this event."
What that announcement tells me is the exchange knows they must maintain integrity and most accounts will be made whole.
Larry
PS: Still time to register for the Las Vegas Traders expo. We will hold our reception for you at Yolo's in Planet Hollywood on Thursday from 5 to 7 PM. See us at the expo to get your access card. Las Vegas Traders Expo
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