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Post by unlawflcombatnt on Aug 15, 2007 21:42:23 GMT -6
Many have now heard about Sentinel Managements announcement of a freeze on redemptions, on what were thought to be relatively safe investments. Though apparently similar to money market funds, they weren't exactly the same as money market funds. Sentinel requested permission to halt redemptions from various regulatory bodies, and was denied. Apparently, they froze redemptions anyway, without any regulatory consent. The subject is covered very well in Mish's Global Economic Analysis Blog.
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Post by unlawflcombatnt on Aug 18, 2007 2:56:53 GMT -6
According to an article in the Wall Street Examiner, titled Money Market Funds - not so boring after all, Sentinel Management declared bankruptcy on Friday, August 17th. This is just 3 days after freezing redemptions. Thus, all investors who were refused money lost most, if not all, of their money.
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Post by unlawflcombatnt on Aug 18, 2007 3:31:17 GMT -6
from Reuters: Sentinel files for Chapter 11 bankruptcySat 18 Aug 2007, 7:17 GMT By Martin Howell " NEW YORK (Reuters) - Sentinel Management Group Inc., a cash management firm serving the U.S. futures industry whose decision to freeze client accounts on Tuesday helped roil global financial markets, filed for Chapter 11 bankruptcy protection late on Friday.
The firm, which managed about $1.6 billion of assets, said in the filing that its board decided it was in "the best interests of the corporation, its creditors and other interested parties that a voluntary petition be filed ... in an effort to restructure the indebtedness of the corporation," according to a filing in the bankruptcy court for the Northern District of Illinois.
Sentinel told clients in an August 13 letter: "we are concerned that we cannot meet any significant redemption requests without selling securities at deep discounts to their fair value and therefore causing unnecessary losses to our clients."
The Northbrook, Illinois-based firm said then that "we don't believe it is in anyone's best interest if a run on Sentinel took place and we were in a forced liquidation mode."
That announcement had helped to drive U.S. stocks lower, taking the Dow Jones industrial average to a four-month low, as it added to concerns about failing entities due to highly volatile markets and a credit squeeze.
News about Sentinel came on the heels of problems at funds managed by Bear Stearns Cos., Goldman Sachs Group Inc. and other companies in the United States and abroad.
The bankruptcy filing said Sentinel estimated assets and liabilities both exceeded $100 million, but it wasn't more specific. It said it estimated it had at least 200 creditors.
Late on Tuesday afternoon, a U.S. Commodity Futures Trading Commission official, who requested anonymity, had said U.S. futures exchanges were trying to get other futures companies to step in and ease Sentinel's concerns about client redemptions.
But the bankruptcy filing came as clients began hitting Sentinel with lawsuits, accusing the cash management firm of selling investors' assets too cheaply and without approval, the Chicago Tribune reported in its online site on Friday.
PENSON SUIT
Penson GHCO, a unit of publicly traded Penson Worldwide Inc. of Dallas, filed suit late Friday afternoon in Cook County Circuit Court against both Sentinel and Chicago-based hedge fund group Citadel Investment Group, according to the report.
Separately on Friday afternoon, a U.S. district judge blocked the sale of some of Sentinel's assets to Citadel, granting a temporary restraining order that applied only to Farr Financial Inc. and Velocity Futures, the Chicago Tribune said.
Earlier in the day, Penson GHCO said in a statement that Sentinel informed it on Thursday of the sale of certain assets, including Penson's assets, to Citadel. The sale occurred without notice and without Penson's approval, and was in breach of its contract with Sentinel, Penson said.
"Based on what we have heard of the proposed terms, we believe that this sale occurred at discounts of up to 30 percent from market prices," Penson said.
Penson, which went public in July 2006, said it would suffer an after-tax loss of $6.5 million if Sentinel's sale isn't reversed.
"This hastily arranged sale of Sentinel's assets at unfair prices represents a gross injustice to Penson and the other customers of Sentinel," said Daniel P. Son, president of Penson Worldwide....
Sentinel said in its filing that it signed a letter on August 15 engaging the law firm of Goldberg Kohn Bell Black Rosenbloom and Moritz Ltd. to help with the bankruptcy petition.
In the filing, Sentinel lists its creditors holding the top 20 unsecured claims. They are: Discus Master Ltd.; Trading LSIII; IFX Markets Inc. House Account; SMW Trading Company, Inc. Hse; Jump Trading, LLC; JEM Commodity Relative Value Fund LP Trading; Rotchford L. Barker Rev. Living Trust; BC Capital Fund A, LLC; LakeShore Alt Financial Asset-Trading 2; 2100 Capital Multi-Strategy Master GlobeOp Financial Services; BC Capital Fund B, LLC; Sentinel US Liquidity Fund, Ltd.; Dighton UTG Fund SPC obo Aggressive Portfolio; Sentinel Bank & Trust Ltd.; Leviathan Diversified Fund 3XL; Lake Shore AltFinancial Fund IV Ltd.-Trading; Fortis Clearing Americas LLC US CFTC Reg 30.7; One York Property, LLC; Blueprint Partners LP; Stone Capital Group, Inc." Alternate LinkAlternate Link 2
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Post by jeffolie on Aug 18, 2007 10:51:45 GMT -6
What other bombs like this are going to blow up? Treasury Direct look better and better now. Do not trust the lying bastards who tell you these funds are safe.
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Post by unlawflcombatnt on Aug 19, 2007 3:26:50 GMT -6
I'm with you on that.
Though I hate to put blind faith in the government, I trust Treasury bonds a quantum leap more than any private debt, as well as more than any broker or fund manager.
Now when anyone hears the term "redemptions have been suspended," it means someone has lost all their money. And it's not the fund manager of the CEO of the company that's losing, it's the people that trusted them.
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Post by unlawflcombatnt on Aug 21, 2007 4:06:58 GMT -6
from MarketWatch: www.marketwatch.com/news/story/sec-charges-sentinel-management-fraud/story.aspx?guid=%7B3CBD8A03%2D2082%2D4089%2D8400%2DB8995AF5A8A1%7D&dist=morenewsSEC charges Sentinel Management with fraudBy Robert Schroeder, MarketWatch 8/20/07 " (MarketWatch) -- The Securities and Exchange Commission filed fraud charges against Sentinel Management Group, a $1.5 billion firm that oversaw cash for other investors, the agency said in a court filing Monday.
Sentinel filed for bankruptcy on Friday, becoming the latest casualty of the global credit squeeze. In a filing with the U.S. District Court for the Northern District of Illinois, the SEC said Sentinel "defrauded its clients by improperly commingling, misappropriating and leveraging their securities without their knowledge," in violation of U.S. securities law...."
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