As a voter you have every right to talk to your members of Congress. It is easier with the Senate because ever State has two Senators. It is even easier if one of them is on the committee with jurisdiction over the CFTC, which is the Committee on Nutrition and Forestry. I know because I was the General Counsel and Staff Director when we wrote the law creating the CFTC in 1974.
Moreover, the Senate is a very collegial place. If one of your Senators is not on the committee, he or she will have a friend who is. We simply want the Committee to have oversight hearings this year on the OptionSellers/INT FCStone breakdown. One thing it would be good to know is how much investor money was lost. The CFTC should have this information. If they don’t have it they can get it.
The Chairman of the Committee is Senator Pat Roberts of Kansas, and the Ranking Democrat is Senator Debbie Stabenow of Michigan . Also, the leader of the Republican Majority in the Senate is Mitch McConnell of Kentucky and he is on the Committee.
In the House of Representatives, the process is much the same. Every voter only has one Congressman. The committee of jurisdiction is the House Agriuculture Committee. It has more members, a total of 46. The House is controlled by Democrats and it is lead by Speaker Nancy Pelosi. It is generally easier to talk to members of the House, because each House Member represents fewer constituents.
In both the Senate and the House, it is important to find out the name of the staff person who handles this area of responsibility for the Senator or Congressman.
Here is the link:
Michael R. McLeod
I have written a few blogs on the subject of allowing INT FCStone to escape the disastrous meltdown of OptionSellers.com without any consequences for itself. This is the first time in the history of futures trading that this has happened. The futures markets have always relied on the integrity of the clearing members to make the system work.
Make no mistake, OptionSellers was only the trading advisor for the clients that it signed up. INT FCstone was the clearing member who placed the trades on the futures markets. They guaranteed that ”all of the transactions are either hedges or contemplate actual delivery and receipt of the property and payment therefor”.
This is absolutely the opposite of what OptionSellers was doing, as described in their book and all of their promotional literature. It is clear that they were only using INT IFSone to sell naked put options to collect the premiums. They never were hedges and there was never an expectation that actual delivery would be made. Their strategy was their expectation that these options would expire worthless and they would simply pocket the premiums.
No executives of INT FCstone can testify in a court of law that they were unaware of this without committing perjury.
In the case of the CFTC , it would be interesting to have hearings with the CFTC appearing before Congress to explain the difference between this case and a 2013 case where the CFTC fined INT FCStone $1.5 million and forced them to absorb losses of $127 million.
What happened to change their position? What persuaded them to let the clearing member INT FCStone entirely off the hook this time while holding innocent investors liable for all of these losses.
As I indicated in a previous blog ”Where is Gary Gensler When We Need Him ”, Chairman Gensler took the leadership in establishing the Coalition for Futures Reform.
Gensler met weekly with a private sector group who successfully lobbied for the enactment of the Wall Street Reform Consumer Protection Act of 2010, popularly known as the Dodd-Frank legislation.
We are at another crisis point in the history of the futures industry Without the integrity of the clearing members, who all trades must go through, there can be no industry. That is why I am calling for a new ”Coalition for Futures Trading Reform”.
It is equally important that members of Congress hear from their constituents. It appears that the Senate Agriculture Committee will hold hearings on this matter later this year. I spent my career as a lawyer, and later as a lawyer-lobbyst working with Congress. I will be happy to advise people on the easiest way to contact their members of Congress. Some lawyers are representing the victims of OptionSellers/INT FCStone. I will be happy to work with them as well.
Michael R. McLeod
Like millions of other Americans, I woke up this weekend to reports of two massacres. One them was in El Paso, Texas where 20 people were killed and 26 were wounded. The other was in Dayton, Ohio where 9 people were killed and 26 were wounded. The number of people who were killed may rise if they do not survive their wounds.
Because the shooter in Dayton was himself killed in that incident we don’t know the motives for his horrendous murders. However, the guy who killed those people in the Walmart in Texas has said that his motive was to kill as many Mexicans as possible. He drove for ten hours across Texas to do so.
I have known a few Mexican Americans in my career in Agricultural and Derivatives law. My favorite was Kika de la Garza, who served for several years as the House Agriuculture Committee. He was preceded in that position by Congressman Tom Foley, whose widow Heather is still my friend, and succeeded by Congressman Pat Roberts, who is still my friend as Chairman of the Senate Agriuculture Committee.
The one thing that we all had in common is that we loved Kika. He had served as a father figure to several of us. No one ever thought that he was less American than any of us. He served as a lieutenant in the Navy during the Korean War. He would refer to himself as a “little ole Mexican shoe shine boy from Mission, Texas”.
Things were much more nonpartisan in those days. When my friend Ed Madigan, who served as the Secretary of Agriuculture in the administration of the first George Bush, died of lung cancer, de la Garza and I flew to Chicago and I drove us in a car down to Lincoln, Illinois for the funeral. Of course Madigan was a Republican and Kika was a Democrat.
Starting with President Trump, our leaders must tone down the anti-immigrant rhetoric. I notice Mexican Americans doing the work that no one else wants to do. The other thing that must be done is to tighten our gun laws. There is no legitimate reason for a private citizen to possess an assault rifle. Members of Congress should not accept political contributions from the National Rifle Association.
Michael R. McLeod
With the failure of the current Commodity Futures Commission to do much to fulfill its statutory mandate I thought of Gary Gensler, the 11th Chairman of the CFTC. By all measures he is the most impressive who has ever served.
Gensler had made his fortune as one of the leadership of Goldman Sachs, which was and still is one of the elite brokerage firms in the world. Some on Capitol Hill were leery of him at first because he came from the financial industry. However, he quickly put those concerns to rest .
He was at the center of dealing with the 2008 financial crises. That involved the $400 trillion over-the- counter derivative or swaps market. This legislation is known as Dodd-Frank, but the correct name is “The Wall Street Reform Consumer Protection Act of 2010”.
What none of official records indicate is Gensler’s role in lobbying Congress to give him the statutory authority to do his job. In January 2010 he engineered the formation of the Commodity Markets Oversight Coalition and the Americans for Financial Reform Coalition.
I know all of this because I was a member of of these coalitions and helped in meeting with Congress. Gensler would meet with us on a weekly basis. The titular head was a Hedge Fund manager domiciled in the US Virgin Islands and an office in Atlanta. However, Gensler met with us on a weekly basis and was our real leader.
I was able to participate on a pro bonobasis because I had recently lost my representation of the Chicago Board of Trade after it was acquired by the Chicago Mercantile Exchange In 2018. I remained a part of the Coalition until I was hired by old friend John Damgard, President of the Futures Industry Association. I remained there until he retired a few years ago.
Unfortunately, the current leadership of the CFTC has not shown the same kind of leadership that Gensler has. They are allowing one large clearing member, INT FCStone, to get away with avoiding responsibility for hundreds of millions of dollars of losses from themselves to innocent investors. Despite Freedom of Information Act Requests I have been unable to determine the amount. Either they don’t know, or don’t want to know.
To their credit, the CFTC had acted forcefully in 2013 when they imposed a fine of $1.5 million on INT FCStone in 2013 and forced them to swallow $127 million in losses.
I long for the days of Gary Gensler !
Michael R. McLeod
One of my earlier blogs stated that we would have to depend on the FBI, Department of Justice, to do the job of the CFTC. My apologies to the CFTC.
I said this because on December 14, 2018, only one month after the collapse of OptionSellers, I received a letter from a woman on the official letterhead of the FBI, Department of Justice. It said that she was a Victim Specialist and understood that I was a victim of a financial crime. However, I have not heard from this lady since.since that time. I may have talked to her only once since that letter was sent to me. When I try to communicate with her I get no response.
At least the CFTC is responsive to its Congressional oversight committee, the Senate Agriuculture Committee. That is the committee where I served as the young General Counsel when we drafted and got through Congress the Commodity Futures Trading Commission Act of 1974.
Michael R. McLeod