Gerald Gottus, a retired musician from New York, has been working as an individual S&P futures trader for eight years now.
But he hasn’t been able to make a single trade since October 31 because of the MF Global bankruptcy debacle when customer accounts were frozen.
Not surprisingly, he’s frustrated.
“That’s my income,” Gottus said noting that he will be retiring soon.
And that’s not the only thing bothering him.
Following the broker-dealer’s bankruptcy filing came the news that a whopping $600 million in client funds were missing.
What’s problematic is individual futures traders like Gottus are not backed up by the SIPC (Securities Investor Protection Corporation).
“I had no clue that my money in these accounts would have zero back up,” he said.
What’s more is people like Gottus probably won’t get all their money back.
Recent media reports show that MF Global customers hoping to retrieve their funds might have to share them with other customers. Basically, they will not get 100 cents for every dollar.
He’s frustrated with Jon Corzine’s actions saying that the disgraced MF Global chief should “be in another business because he doesn’t know his business.”
“It’s disconcerting the fact that as a trader you take these calculated risks all the time and I find it very disconcerting that I have to pay for someone else’s miscalculated risks,” he explained.
“The American people got duped from the financial industry. I got duped by one of my own kind.”
Gottus said he’s heard of other futures traders in the same boat as him. They aren’t able to work because the assets are frozen.
Here’s the problem: As opposed to all other traders, futures traders “don’t really own anything per se” because they don’t usually have positions unless they hold overnight, he said. All of the futures traders’ money is in cash, he explained, adding that since they don’t have any positions, everyone else assumes it’s just cash.
However, he needs those funds in order to trade so he can get back to work.
So while he’s waiting for the issue to be resolved, he finds other ways to keep himself occupied while sitting on the sidelines of the market.
“I still have a chat room I am part of, so I still kind of fulfil my responsibilities in there,” he said. “We are a team. I still do the research. I still look at the charts.”
“My yard looks good and I’m starting to get into my basement,” he laughed with an underlying tone of frustration.