Reply #56: Karl Denninger: Clawback Risk. Must Read!

[DemReadingDU]

12/6/11 Karl Denninger: Clawback Risk

Even if it turns out that your funds as a customer were stolen through a rank violation of the segregation that is supposed to be in place, JP Morgan and Bank of America, among others, want to be able to claw back your money should their claims against the bankrupt entity prove up. (read following article)

So much for the alleged "separation" that the entire premise of brokerages rest upon -- that your free cash and margin deposits are yours and are not "investments" in the underlying business of the firm you are choosing to trade with.

If you think this risk doesn't apply to you and you're in the market in any way, shape or form you're quite-simply wrong.

http://market-ticker.org/akcs-www?post=198641



12/6/11 Dimon eyes clawback
Chase leads block of MF distribution

Mf Global’s burned commodity customers turned their ire from Jon Corzine to Jamie Dimon yesterday after MF’s creditor committee, led by Dimon’s JPMorgan Chase, objected to a plan to distribute $2.1 billion to customers who have seen their accounts frozen since Halloween.

In a Manhattan bankruptcy court filing, the creditors committee, which also includes Bank of America and hedge fund Elliott Management, said they want more assurances that the $2.1 billion is not their money.

Among their requests: They want customers to agree in writing that the money they receive could be clawed back.
more...
http://www.nypost.com/p/news/business/dimon_eyes_clawba...