The reason that I do not place a lot of margin with Brokers. ie use as much leverage as available. =============================================================== BBY trust accounts missing money, KPMG says; clients out of pocket millions of dollars By Elysse Morgan Posted yesterday at 7:17pm http://www.abc.net.au/news/2015-05-29/bby-trust-accounts-missing-money-kpmg-says/6508250 Two weeks after the very public collapse of broker BBY, clients have no idea of the state of their investments, with administrator KPMG today releasing a statement saying the broking firm may not have enough money to pay creditors. KPMG said they believed some clients' money was missing from BBY's trust accounts. "At this preliminary stage of our investigations, we have concerns that there could be a shortfall in funds held in trust on behalf of BBY clients, and we are now forensically reconciling the extent of this gap," it said in a statement. They said their investigations were being hampered by the poor state of BBY's financial records and the high number of unprocessed transactions. The administrators held a meeting earlier in the week but creditors said it gave them no new information. BBY chief Glenn Rosewall was a big name in the stockbroking world but unbeknownst to hundreds of clients, his firm had been teetering on the edge of insolvency for weeks. It all came crashing down a fortnight ago when BBY's bank pulled the pin, leaving some clients millions of dollars out of pocket. Following the collapse, the ASX stepped in and froze the company's activities with some clients saying this exposed them to potentially heavy losses. Client traded options for 40 years, lost up to $10m in collapse BBY client Dr Julian Mazzetti has traded options for 40 years and said he was out of pocket "somewhere between $4 and $10 million". He said his money was lost when his options contracts were forcibly closed by the ASX following BBY's collapse. Some of the positions that I had bought I had held for over nine months. I thought they were mine to sell and manage as my property - apparently not. BBY client Dr Julian Mazzetti "My property was taken and sold last week, without my knowledge, without my consent and still a week later I can't get any sense out of anyone," Dr Mazzetti said. Options are complex and risky. They are contracts between buyers and sellers in the market, the buyer has the option to buy a stock at a certain price within a specified time. They require constant management. "Some of the positions that I had bought I had held for over nine months," Dr Mazzetti said. "I thought they were mine to sell and manage as my property - apparently not." The ASX stopped all clients from trading within hours of administrators taking control. Options then started to be closed out, but not instantly, leaving clients exposed. The ASX said it had no alternative but to take the unprecedented action. "... When insolvency occurs unfortunately the number of options shrinks dramatically - we had no choice but to start closing out," ASX chief Elmer Funke Kupper said. 'I watched tens, if not hundreds, of thousands of dollars disappear' BBY client Dr Gunnar Haid was stunned when the ASX stopped all clients from trading. "There was a complete halt on trading them, that doesn't sound like a big deal but for an options trader to not be able to trade open positions is a bad thing and is scary and can cause a lot of damage," he said. There are two ways to look at it, inside the ASX they either didn't know what the consequences are or they didn't care, it's one of those and I don't know which one is worse. BBY client Dr Gunnar Haid "What shocked me was that I was told 'sorry, but you can no longer trade' so I was waiting with open contracts three days before expiry [which is a] pretty nasty market move and all I could do was look and watch as possibly tens, if not hundreds, of thousands of dollars disappeared." Questions are being asked whether the ASX could have prevented the losses if it moved against BBY earlier. Back on May 6, the ASX was aware BBY was close to insolvency and committed then to working with the company to prevent a collapse and protect clients. "We worked very hard for those 10 days with the company and with the bank to see if we could get to an orderly process of the company exiting the options business and transferring the customers to another clearer and another bank," Mr Kupper said. BBY had told clients then they had to find a new broker by June 1 but that suddenly changed when Mr Rosewall called in the administrators on May 18. Clients that had not already switched brokers, like Dr Mazzetti, were closed out and are furious. "If the regulators were able to appoint a broker who I think was UBS to close out all the accounts, surely they could have appointed a broker to allow continuing trading by the people whose accounts were involved," he said. That was not possible according to the ASX with Mr Kupper saying: "It's not something we can force because remember brokers are independent companies". "We are very grateful to a couple of brokers and clearing participants who were willing to work very hard to take as many clients as possible but again the insolvency event made that stop effectively," he said. That did not sit well will Mr Haid. "There are two ways to look at it, inside the ASX they either didn't know what the consequences are or they didn't care, it's one of those and I don't know which one is worse," he said. Industry critical of ASX action Major industry players saw the ASX's actions as controversial. "I didn't see it form their point of view, I must admit," Ord Minnett chief Karl Morris said on Thursday. "But it would seem now that the position that BBY got itself into had some issue with systemic risk across all the brokers and across the exchange." Criticism has so far been directed at the ASX. But the role of BBY directors Glenn Rosewall, his father Ken and David Perkins is yet to be fully explored.