Hedge Broker Goes Galt: Ann Barnhardt Shuts Down Firm With Chilling Letter

This is an absolute must-read.

If you haven't yet read this letter, due to the recommendation of Rush Limbaugh yesterday, you really need to. This lady, Ann Barnhardt, tells it like it is.

She speaks without fear, holding to the truth, in a manner that would shock most in the business world. Needless to say, she's a Bible-believing Christian. She simply doesn't care about the consequences of telling the truth, and letting the chips fall where they may. This lady rocks!

Here's the story, from The Blaze:

Posted on November 18, 2011 at 8:45am by Jonathon M. Seidl
Ann Barnhardt describes herself as a an “an old-school commercial hedge broker specializing in CATTLE and GRAIN.” And she just shut down her business by delivering a passionate and chilling open letter posted on her website.
“I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not,” she writes. And then she unloads:

Everything changed just a few short weeks ago. A firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let’s not sugar-coat this or make this crime seem “complex” and “abstract” by drowning ourselves in six-dollar words and uber-technical jargon. Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. This is unfathomable. The risk exposure precedent that has been set is completely intolerable and has destroyed the entire industry paradigm. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian Roulette. [Emphasis added]

The letter caught the attention of Rush Limbaugh on Thursday.

“The letter from the hedge fund guy sounds particularly filled with vitriol, but he’s right about something,” Limbaugh said after reading an excerpt. “Corzine was that firm, and the customers’ money is gone, and it’s like $600 million of it, and it’s gone, and they’re trying to get it back, it’s a miniature Madoff in that sense. And somebody did steal that money. Somebody at that firm, which is now bankrupt and 1,100 people or thereabouts have been laid off, somebody stole the clients’ money. It is a big deal to a lot of people.”
We’ve included the entire letter (originally presented in two parts) below (courtesy of Zero Hedge):

BCM Has Ceased Operations (source)
Posted by Ann Barnhardt – November 17, AD 2011 10:27 AM MST

Dear Clients, Industry Colleagues and Friends of Barnhardt Capital Management,

It is with regret and unflinching moral certainty that I announce that Barnhardt Capital Management has ceased operations. After six years of operating as an independent introducing brokerage, and eight years of employment as a broker before that, I found myself, this morning, for the first time since I was 20 years old, watching the futures and options markets open not as a participant, but as a mere spectator.

The reason for my decision to pull the plug was excruciatingly simple: I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not. And this goes not just for my clients, but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. Given this sad reality, I could not in good conscience take one more step as a commodity broker, soliciting trades that I knew were unsafe or holding funds that I knew to be in jeopardy.

The futures markets are very highly-leveraged and thus require an exceptionally firm base upon which to function. That base was the sacrosanct segregation of customer funds from clearing firm capital, with additional emergency financial backing provided by the exchanges themselves. Up until a few weeks ago, that base existed, and had worked flawlessly. Firms came and went, with some imploding in spectacular fashion. Whenever a firm failure happened, the customer funds were intact and the exchanges would step in to backstop everything and keep customers 100% liquid – even as their clearing firm collapsed and was quickly replaced by another firm within the system.

Everything changed just a few short weeks ago. A firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let’s not sugar-coat this or make this crime seem “complex” and “abstract” by drowning ourselves in six-dollar words and uber-technical jargon. Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. This is unfathomable. The risk exposure precedent that has been set is completely intolerable and has destroyed the entire industry paradigm. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian Roulette.

I have learned over the last week that MF Global is almost certainly the mere tip of the iceberg. There is massive industry-wide exposure to European sovereign junk debt. While other firms may not be as heavily leveraged as Corzine had MFG leveraged, and it is now thought that MFG’s leverage may have been in excess of 100:1, they are still suicidally leveraged and will likely stand massive, unmeetable collateral calls in the coming days and weeks as Europe inevitably collapses. I now suspect that the reason the Chicago Mercantile Exchange did not immediately step in to backstop the MFG implosion was because they knew and know that if they backstopped MFG, they would then be expected to backstop all of the other firms in the system when the failures began to cascade – and there simply isn’t that much money in the entire system. In short, the problem is a SYSTEMIC problem, not merely isolated to one firm.

Perhaps the most ominous dynamic that I have yet heard of in regards to this mess is that of the risk of potential CLAWBACK actions. For those who do not know, “clawback” is the process by which a bankruptcy trustee is legally permitted to re-seize assets that left a bankrupt entity in the time period immediately preceding the entity’s collapse. So, using the MF Global customers as an example, any funds that were withdrawn from MFG accounts in the run-up to the collapse, either because of suspicions the customer may have had about MFG from, say, watching the company’s bond yields rise sharply, or from purely organic day-to-day withdrawls, the bankruptcy trustee COULD initiate action to “clawback” those funds. As a hedge broker, this makes my blood run cold. Generally, as the markets move in favor of a hedge position and equity builds in a client’s account, that excess equity is sent back to the customer who then uses that equity to offset cash market transactions OR to pay down a revolving line of credit. Even the possibility that a customer could be penalized and additionally raped AGAIN via a clawback action after already having their customer funds stolen is simply villainous. While there has been no open indication of clawback actions being initiated by the MF Global trustee, I have been told that it is a possibility.

And so, to the very unpleasant crux of the matter. The futures and options markets are no longer viable. It is my recommendation that ALL customers withdraw from all of the markets as soon as possible so that they have the best chance of protecting themselves and their equity. The system is no longer functioning with integrity and is suicidally risk-laden. The rule of law is non-existent, instead replaced with godless, criminal political cronyism.

Remember, derivatives contracts are NOT NECESSARY in the commodities markets. The cash commodity itself is the underlying reality and is not dependent on the futures or options markets. Many people seem to have gotten that backwards over the past decades. From Abel the animal husbandman up until the year 1964, there were no cattle futures contracts at all, and no options contracts until 1984, and yet the cash cattle markets got along just fine.

Finally, I will not, under any circumstance, consider reforming and re-opening Barnhardt Capital Management, or any other iteration of a brokerage business, until Barack Obama has been removed from office AND the government of the United States has been sufficiently reformed and repopulated so as to engender my total and complete confidence in the government, its adherence to and enforcement of the rule of law, and in its competent and just regulatory oversight of any commodities markets that may reform. So long as the government remains criminal, it would serve no purpose whatsoever to attempt to rebuild the futures industry or my firm, because in a lawless environment, the same thievery and fraud would simply happen again, and the criminals would go unpunished, sheltered by the criminal oligarchy.

To my clients, who literally TO THE MAN agreed with my assessment of the situation, and were relieved to be exiting the markets, and many whom I now suspect stayed in the markets as long as they did only out of personal loyalty to me, I can only say thank you for the honor and pleasure of serving you over these last years, with some of my clients having been with me for over twelve years. I will continue to blog at Barnhardt.biz, which will be subtly re-skinned soon, and will continue my cattle marketing consultation business. I will still be here in the office, answering my phones, with the same phone numbers. Alas, my retirement came a few years earlier than I had anticipated, but there was no possible way to continue given the inevitability of the collapse of the global financial markets, the overthrow of our government, and the resulting collapse in the rule of law.

As for me, I can only echo the words of David:

“This is the Lord’s doing; and it is wonderful in our eyes.”
With Best Regards-  Ann Barnhardt

“I am going to head out of town for a few days, but will be checking email and messages,” Barnhardt wrote, after describing her letter as “going Galt” — a reference to Ayn Rand’s “Atlas Shrugged.”
“Thanks to one and all for the kind support and prayers. Please be assured of mine in return, for all of us.”
Read more about MF Global here and here.
UPDATE:
It turns out Barnhardt has a history of being quite outspoken. She regularly posts videos to a YouTube channel and has a history of making controversial statements about Islam. She’s also come under fire for her thoughts on the bin Laden raid.

Despite some of her baggage, though, she is grabbing headlines. Besides catching the attention of Zero Hedge and Limbaugh, her story was also featured in an article on Bloomberg Business Week’s website today.

Could it be that despite her past, her present story is still compelling?
(H/T: Andrea Shea King)
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And if you think that was bold, just watch her video clip where she dares to criticize Islam, in very candid terms (she's not happy about the pro-Islamic propaganda in the media, and she goes after Islam itself, for being a TOTALITARIAN POLITICAL SYSTEM, not a religion, and she goes after Mohammed's sexual perversions [CONTENT WARNING: Graphic Descriptions of Mohammed's Sexual Perversion]), so don't watch it if you're uncomfortable with harsh criticism, including criticism of sexual perversion.

While I don't agree with every word she says in the video (and elsewhere; I disagree with many, but not all, of her thoughts on the Bin Laden Raid in Pakistan, for example), she is largely correct. And it's definitely worth a watch, unless you're defensive of Islam, or you don't wish to watch criticism of sexual perversion, or you're a Muslim (In the last instance, you'll be quite upset), you'll definitely have your eyes opened if you haven't studied the Qu'ran. This is as politically incorrect as it gets. If you don't want to see hardcore (yet factual) criticism of Islam, DO NOT WATCH THIS. Ann pulls no punches. She simply speaks without fear, questioning with boldness (this is part 1 of 4, so if you liked it, go to her YouTube channel and watch the rest):

Video: Ann Barnhardt "Islamic Sexuality: A Survey of Evil" Part 1 of 4

Don’t know who Galt is?  If not you need to read: Atlas Shrugged or better yet get Ayn Rand’s Box Set including Atlas Shrugged and The Fountainhead

Also check out Schweizer’s and Abramhoff’s new books:  Throw Them All Out and Capitol Punishment

Soros to Quit Hedge Fund and Return to Cash Investors

Bloomberg is reporting some interesting news regarding George Soros: he’s quitting.

The outlet says that the liberal billionaire financier is dissolving the non-family aspect of his hedge fund that put him on the monetary map:

[T]he billionaire best known for breaking the Bank of England, is returning money to outside investors in his $25.5 billion firm [and is] ending a career as hedge-fund manager that spanned more than four decades.

Soros, who turns 81 next month, will hand back the money, less than $1 billion, by the end of the year, according to two people briefed on the matter. His firm will focus on managing assets solely for Soros and his family, according to a letter to investors. Keith Anderson, 51, chief investment officer since February 2008, is leaving, said the letter, signed by Soros’s sons Jonathan and Robert, who are co-deputy chairmen.

The news raises a plethora of questions — mainly, why? According to Bloomberg, the family didn’t want to adhere to SEC reporting mandates that would have forced the fund to divulge information about its investors:

Soros’s sons said they took the decision because new financial regulations would have made it necessary for the firm to register with the Securities and Exchange Commission by March 2012 if it continued to manage money for outsiders. [...]

The rule calls for hedge funds with more than $150 million in assets to report information about their investors and employees, the assets they manage, potential conflicts of interest and their activities outside of fund advising. Registered funds will also be subject to periodic inspections by the SEC.

“We have relied until now on other exemptions from registration which allowed outside shareholders whose interests aligned with those of the family investors to remain invested in Quantum,” the executives said in the letter to executives, referring to its flagship Quantum Endowment Fund. “As those other exemptions are no longer available under the new regulations, Soros Fund Management will now complete the transition to a family office that it began eleven years ago.”

Still, there are plenty more questions. Is Soros wanting to concentrate on his politically-charged donations? Why just over a year from the election? Does this mark his formal transition from businessman to political activist?

The country might be wise to remember a phrase oft-repeated by Glenn Beck: “Watch the other hand.”

Source:  The Blaze

I just finished reading Bill O’Reilly’s Pinheads and Patriots and on page 160 O’Reilly points out that George Soros gamed the U.S. elections laws by donating close to $25 Million to more than $500 political organizations, all dedicated to humiliating President George W. Bush.  I knew he had done that, just didn’t have the monetary figure.

Soros gave money to the Clinton, Obama and McCain campaigns.  Before Obama, Hillary was Soros’ girl and you can bet that they are still a team.  If you haven’t, check out: The Shadow Party

Since that time Soros has openly admitted that his goal is to destroy capitalism and the U.S. economy.  Many think he is the puppeteer behind the Obama throne.  He has visited the White House numerous times in the past 2.5 years since Obama has been the resident.

Just think… Soros is now 81-years-old, what better way to go out than my destroying the greatest country on Earth if you consider yourself a “God”. And by getting out of the hedge fund game, he will have both the time and the money.

h/t to TLA