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20111103 – The projects of YouTube user Hunwick9
2011/11/03Posted by on
Segment #1: This week in free energy
Presenter: Sterling Allan, CEO, founder of New Energy Congress
Estimated Time: 20 minutes
Segment #2: Scarecrow’s News Rant – MF Global, another Lehman Brothers moment?
Presenter: an editorial by SmartScarecrow
Estimated time: 10 minutes
Notice regarding CME, NYMEX and ICE Action
Due to MF Global Holdings Ltd. and its finance subsidiary, MF Global Finance USA Inc., filing for Chapter 11 Bankruptcy Petition, the CME Group, NYMEX and ICE are accepting “liquidation only” orders from MF Global clients, and have restricted electronic access to their markets.
This means that you may place offsetting orders for current open positions at MF Global, but may not place any new orders. Performance of your trades is guaranteed by exchange clearinghouses.
FOR IMMEDIATE RELEASE
MF Global Holdings Ltd. Announces Filing for Chapter 11 Bankruptcy Petition
NEW YORK, Oct 31, 2011 — MF Global Holdings Ltd. and its finance subsidiary, MF Global Finance USA Inc., announced today a filing under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court for the Southern District of New York.
The Board of Directors of both entities authorized the filing of the Chapter 11 petition in order to protect their assets.
MF Global (OTC Markets Group: MFGLQ), formerly known as Man Financial, was a major global financial derivatives broker. MF Global provided exchange-traded derivatives, such as futures and options as well as over-the-counter products such as contracts for difference (CFDs), foreign exchange and spread betting. MF Global was also a primary dealer in United States Treasury securities. The company filed for bankruptcy protection on 31 October 2011, with the brokerage unit to be liquidated after liquidity problems arising from investments in European sovereign bonds.
MF Global was the brokerage segment of Man Group until 2007, when the business decided to split the investment and brokerage businesses so they could each focus on their own markets. An IPO was done for the brokerage business which was renamed MF Global to distinguish it from the investment business which remained as Man Group. The company was registered in Bermuda, but subsequently moved its registration and headquarters to the United States.
MF Global traces its roots to the sugar trading business started by James Man in England in 1783, which evolved into broader commodities trading before its later transformation into a financial services business during the 1980s.
Its former parent, then known as ED&F Man, diversified from pure cash commodities into commodity futures in the late 1970s, and established the Anderson Man futures brokerage in 1981. It later changed its name to ED&F Man International and then Man Financial, before adopting the current brand following the IPO and separation of the brokerage from the asset management operation.
ED&F Man operated as a partnership through to the 1970s, when it started an international expansion which, by 1983, saw its staff climb to 650 employees. ED&F Man listed on the London Stock Exchange in 1994, changing its name to Man Group in 2000. Its agricultural business, which retained the EDF Man name, was sold to management the same year.
The rapid expansion of the Man Investments unit in the emerging hedge fund management business shrouded many investors from the development of its brokerage unit.
Man Financial embarked on a series of acquisitions, which expanded its product capability and geographic reach, starting in 1989 with the purchase of the Chicago-based GNP Commodities, and including well-known industry names such as Geldermann, Gerald Metals, Tullett & Tokyo Futures, First American Discount Corp., Australia’s Ord Minnett and GNI.
The 2002 purchase of GNI was the largest of these and gave Man Financial access to the then growing Contract for difference market and GNI’s trading platform GNI touch.
However, 2005 saw Man Financial make its largest deal with the transformative $323 million acquisition of client assets and accounts from entities of Refco, following the U.S. financial-services group’s collapse in late 2005. The Refco deal followed a hotly-contested auction with Cerberus Capital, the private equity group, and boosted Man Financial’s scale in retail and institutional business.
On March 17, 2008, shares of MF Global plummeted on liquidity fears. The CME, ICE, Nymex and CFTC issued statements confirming MF Global was in compliance with regulatory and financial requirements.
On October 25, 2011 MF Global reported a $191.6 million quarterly loss as a result of trading on European government bonds. In response Moody’s and Fitch cut the company’s credit rankings to junk. Jon Corzine, the former New Jersey governor who led MF Global, was working to find a buyer, according to several reports.
The firm’s board met through the weekend of October 29/30 in New York to consider options including a sale to avert failure, according to a person with direct knowledge of the situation. It was stopped from doing new business with the New York Fed until it showed it was able to fulfill its responsibilities as a primary dealer, according to a statement on the regulator’s website. Trading in MF Global’s stock was halted.
On October 31, 2011, MF Global filed for Chapter 11 bankruptcy. The Wall Street Journal reported that MF Global would seek Chapter 11 bankruptcy protection after investing $6 billion in sovereign bonds issued by European countries. According to the CME Group Inc., MF Global broke rules on keeping customer money separate from its own trading accounts. On August 31, 2011 MF Global had $7.3 billion in customer assets, according to Commodity Futures Trading Commission data
From Reuters: http://www.reuters.com/article/2011/11/01/us-mfglobal-idUSTRE79R4YY20111101
By Jonathan Spicer and Nick Brown
NEW YORK | Tue Nov 1, 2011 1:58pm EDT
NEW YORK (Reuters) – Jon Corzine’s bid to revive his Wall Street career crashed and burned on Monday when his futures brokerage MF Global Holdings Ltd filed for bankruptcy protection following bad bets on euro zone debt.
Corzine, 64, who once ran Goldman Sachs before becoming a U.S. senator and then governor of New Jersey, had been trying to turn the more than 200-year-old MF Global into a mini Goldman by taking on more risky trades.
But once regulators forced it to fully disclose the bets on debt issued by countries including Italy, Portugal and Spain, it rapidly unraveled with no buyers willing to step in.
MF Global’s meltdown in less than a week made it the biggest U.S. casualty of Europe’s debt crisis, and the seventh-largest bankruptcy by assets in U.S. history.
The company’s shares plunged last week as its credit ratings were cut to junk. The Chapter 11 bankruptcy filing came after talks to sell a variety of assets to Interactive Brokers Group Inc broke down earlier on Monday, a person familiar with the matter said.
There were also signs that some of its customer accounts that are supposed to be segregated and protected from the rest of the business had suffered what regulators described as “possible deficiencies.”
“Early this morning, MF Global informed the regulators that the transaction had not been agreed to and reported possible deficiencies in customer futures segregated accounts held at the firm,” the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission said in a joint statement.
A bankruptcy proceeding led by the Securities Investor Protection Corporation would be the “most prudent course of action to protect customer accounts and assets,” they said.
The New York Times reported later on Monday that federal regulators had discovered that hundreds of millions of dollars in customer money had gone missing from MF Global.
Less than $700 million was missing by late Monday, down from nearly $1 billion earlier, the paper reported on its website.
Regulators are looking into whether the brokerage used some of the money to support its own trades, the Times reported, citing unnamed sources.
MF Global was not immediately available to comment on the Times’ report.
Regulators had expressed “grave concerns” about the viability of MF Global, which filed for bankruptcy only after “no viable alternative was available in the limited time leading up to the regulators’ deadline,” the company’s chief operating officer, Bradley Abelow, said in a court filing.
One of the regulators that pressed MF Global, the CFTC, was unhappy with the brokerage’s failure to give it the required data and records.
“(T)o date we don’t have the information that we should have,” said a source close to the CFTC.
In the end, regulators and markets reacted swiftly to MF Global’s troubles, which may have been exacerbated by Corzine’s affinity for risk-taking over the course of a career that took him to the top echelons of Wall Street and then into politics.
“They went for what would be a very profitable trade with European sovereign debt that obviously has blown up in their face, and brought the company down,” said Dave Westhouse, vice president of Chicago retail broker PTI Securities and Futures.
The bankruptcy is reminiscent of the collapse of Lehman Brothers in 2008 at the height of the financial crisis. But market participants said the impact from this collapse, far smaller, would likely be contained.
Still, MF Global’s 2,870 employees, as well as trading counterparties, were left scrambling and confused on Monday, as MF Global halted its shares but did not file for bankruptcy until well after U.S. markets had opened.
Trading activity in gold, crude oil and grain futures slowed to a crawl as the bankruptcy forced a chaotic scramble to untangle trading positions.
“Ultimately it will have lost all confidence of its investor base,” Michael Epstein, a restructuring adviser with CRG Partners, said of MF Global. “I’m not sure what restructuring it actually does. In some respects, it’s a baby Lehman, in effect.”
There was also uncertainty over Wall Street’s exposure.
JPMorgan Chase & Co’s exposure for a $1.2 billion syndicated loan to MF Global is less than $100 million, a source at the bank said. Deutsche Bank AG is listed in the court filing as a trustee for bondholders with $1 billion of claims. The banks declined to comment.
The impact on the markets should be smaller and nothing like when Lehman failed and hedge funds had money locked up with the firm for months, said Jeff Carter, an independent futures trader in Chicago.
At the Chicago Board of Trade, three traders wearing MF Global jackets were seen leaving prior to the opening of pit trading, and floor sources told Reuters they had been turned away after their security access cards were denied.
Back outside the Manhattan office, one MF Global employee said all he knew about the bankruptcy was what has been on TV. The company’s HR department, meanwhile, was busy making calls withdrawing job offers it made in the past few weeks, according to a person familiar with the situation.
“A sale here is potentially the best outcome for employees because the company will continue to operate as opposed to slowly winding down,” said Dan McElhinney, the managing director of corporate restructuring for Epiq Systems.
“I think there will be a lot of effort to tee up the sale pretty quickly here.”
The New York Federal Reserve terminated MF Global as one of its primary dealers. CME Group Inc, IntercontinentalExchange Inc, Singapore Exchange Ltd and Singapore’s central bank, among others, halted the broker’s operations in some form except for liquidations.
European clearinghouse LCH.Clearnet declared MF Global in default.
THE ROAD TO BANKRUPTCY
Corzine was trying to transform MF Global from a brokerage that mainly places customers’ trades on exchanges into an investment bank that bets with its own capital.
In the past week, the company posted a quarterly loss and its shares fell by two-thirds as investors focused on the euro zone bets and the effect of low interest rates, which hurt profits from its core brokerage operations.
MF Global scrambled through the weekend and into Monday to find buyers for all or parts of the company, while at the same time hiring restructuring and bankruptcy advisers in case nothing could be done.
In the court filing explaining what went wrong, MF Global pointed a finger at regulators. The bankruptcy was hastened by pressure from the CFTC, SEC and the Financial Industry Regulatory Authority, wrote Abelow, the COO.
FINRA ordered that its U.S. broker-dealer unit, called MFGI, boost net capital, and then reveal a $6.3 billion stake in short-term debt from European sovereigns with “troubled economies,” he wrote.
Market concerns over such exposures led to MF Global being downgraded to “junk” status by various credit rating agencies, sparking margin calls that threatened liquidity, he added.
“Concerned about the events of the past week, some of MFGI’s principal regulators — the CFTC and the SEC — expressed their grave concerns about MFGI’s viability.”
MF Global in the filing did not elaborate on the regulators’ concerns or the reasons behind them.
FINRA declined to comment.
According to a July proxy filing, Corzine would be entitled to $12.1 million in severance, prorated bonus and other benefits upon being terminated without cause. Two other executives would be entitled to more: retail operations chief Randy MacDonald could get $17.9 million and Abelow could get $13.7 million.
However, federal bankruptcy law may limit any possible severance payouts.
First-day hearings in the case were scheduled for Tuesday at 3 p.m. in U.S. Bankruptcy Court in Manhattan. Among other things, MF Global is expected to seek permission from Judge Martin Glenn to use cash collateral to keep operating its business, court papers show.
By filing for bankruptcy, MF Global freezes the value of its free-falling notes and gives potential suitors a clearer picture of the losses they would be taking on, said Bill Brandt, CEO of Chicago-based turnaround firm Development Specialists Inc.
If a sale is in the offing, he added, the buyer may be a European bank or sovereign government, as such entities would be particularly keen on stopping the slide and maximizing the value of the notes.
“The real question is how many assets will be left to transfer,” said Niamh Alexander, an analyst at Keefe, Bruyette & Woods. “Customers might move very quickly and it may be that every hour that passes shrinks the portfolio of assets that could be transferred” to a buyer, she said.
The bankruptcy is the latest flop for finance-focused private equity fund J.C. Flowers, whose other recent investments include nationalized German bank Hypo Real Estate.
After dividends the private equity firm has received for its preferred shares, J.C. Flowers’ net exposure to MF Global is $47.8 million, according to a source familiar with the matter. The firm declined to comment.
MF Global hired boutique investment bank Evercore Partners to help find a buyer, separate sources said last week.
The broker’s deeply distressed 6.25 percent notes maturing in 2016 fell 4 cents to 46 on the dollar, according to the Trace, which reports bond trades. The price had earlier fallen as low as 15 cents.
MF Global shares remained halted in New York.
(Additional reporting by Paritosh Bansal, Jonathan Stempel, Caroline Humer, Matthew Goldstein, David Sheppard, Jessica Toonkel, Michael Erman, Lynn Adler, David Henry, Dan Wilchins and Lauren LaCapra in NEW YORK, Tom Hals in WILMINGTON, Doris Frankel in CHICAGO, Jessica Hall in PHILADELPHIA, Christopher Doering in WASHINGTON, Narayanan Somasundaram in SYDNEY, and Douwe Miedema and Dominic Lau in LONDON; editing by Erica Billingham, Matthew Lewis, Dave Zimmerman, Andre Grenon, Gary Hill)
Segment #3: Feature Presentation – The projects of YouTube user Hunwick9
Presenter: SmartScarecrow & Hunwick9
Estimated time: 45 minutes
This presentation was recorded on Tuesday November 1st, 2011. YouTube user Hunwick9 lives in Melbourne Australia so trying to do a live presentation would have been a bit difficult.
In this presentation, two of the most recent projects of Hunwick9 are displayed and discussed.
One is a pretty damn cool portable electrical power generation device of rather innovative design. The device is primarily constructed of conponents that can be purchased off the shelf but are integrated in a way that is rather unique.
The other project discussed is rather advanced from a technical point of view. A two cylinder 2-Cycle gasoline engine constructed from a pair of single cylinder engines. A lot of engineering and custom machining went into this very unusual power plant.
Unfortunately, because this presentation was recorded in advance and Hunwick9 will probably be in the middle of his work day when the presentation is aired, we will not be able to take audience questions and comments for the builder. But Hunwick9 can be contacted via his YouTube channel if any might be interested in discussing these projects with him.
Segment #4: Audience Q&A Session
Estimated time: 10 minutes