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?

http://www.theblaze.com/stories/going-galt-hedge-broker-shuts-down-firm-with-chilling-letter-about-the-market/