But the theory is no good. That did not apply in Murroughs or in Beaufort.
And whom do you instruct?
Brendan
Once an administrator or liquidator is appointed, they run the operations as normal. You would send your instruction in exactly as you do now.
I'd have to look at the two cases but I would guess that in both cases they were small operations where the "seniors" overrode the checks and balances and essentially moved client assets into company accounts. That would be illegal
I love this. Have you ever met a liquidator, and I don't mean over a sherry.
Telling a liquidator that "these" assets are excluded is like telling a shark in a feeding frenzy that it can only eat those fish, it cannot eat these fish.
A liquidator will aggressively try every and any legal means to get his or her hands on any assets in the vicinity of a liquidation. That is their job. They are often very good at it.
How can you have confidence that the regulations are drawn tightly enough to safeguard assets in the face of a liquidators onslaught, and if the regulations are sufficient to safeguard assets that have been held correctly how sure can you be that the assets were in fact held correctly in such a way that they can avail of the regulations. That the regulatory package is watertight and that the assets have been correctly placed in the regulatory package.
The cases quoted above seem to suggest that assets are not always safe. You will never know until the tide goes out.
Yes I have met a liquidator. I've been involved with liquidators on both sides. I'm very familiar with both large custodians and the operations of large broker dealers (not small family run shops). I currently look after about $400bn worth of client assets.
A liquidator won't touch assets designated as "client assets". It's not even a conversation. The problem occurs if client assets have been moved to firm asset accounts. That's when it gets messy (or where client assets have been pledged to the firm and therefore become property of the firm)
The regulations are pretty strict. But like anything, policing them is a problem. Generally larger firms will be a lot more stringent about it than small ones. The cases quoted seem to be small shops where pressure for liquidity or assets "persuaded" management to "borrow" from clients - not dissimilar to cases where legal firms had been found to be using client funds illegally.