KEY POINTS:
New York - Sentinel Management Group, which oversees about US$1.6 billion ($2.2 billion) in assets, will not receive help from a commodities regulator to stop clients from pulling out their money, a move that could lead to big losses.
The US Commodity Futures Trading Commission said yesterday it had no authority to grant Sentinel's request to block client redemptions.
"We have no role in whether or not the company does this and whether the client accepts this," a commission official said.
Sentinel of Northbrook, Illinois declined to comment. But in a letter this week, the investment firm warned clients that a redemption panic could trigger a forced liquidation of securities at steep losses.
In a June report filed with the commission, Sentinel reported US$3.3 million in adjusted net capital and excess net capital of US$2.8 million. But money segregated for customer positions totalled US$1.53 billion, the report said.
"We are concerned that we cannot meet any significant redemption requests without selling securities at deep discounts to their fair value and therefore causing unnecessary losses to our clients," Sentinel said in an August 13 letter to clients.
Sentinel, a futures commission merchant with the trading commission, serves as an investment adviser and as an intermediary between investors and the exchanges.
CME Group, the largest US futures exchange, said its clearing member firms had continued to meet all of their obligations and remained in good standing.
CME said Sentinel was not a clearing member of the CME Group or any other exchange.
- Reuters
