…because it doesn’t have the authority to do so. In response to Sentinel’s letter requesting it be allowed to halt (the massive number of) redemption requests recently received, a CFTC official told Reuters: “The CFTC has no authority in this area. This isn’t something we do. We have no role in whether or not the company does this and whether the client accepts it.” And probably would’ve like to have added, “We have no idea why Sentinel came to us with this request. This is highly unusual, ‘this’ being a money manager that doesn’t know under which regulator it falls. Wow. Just ‘Wow.’ Also: ‘embarassing’.”
Note to any Sentinel investors who haven’t yet asked for their money bank– maybe now’s the time?
US CFTC says it can’t halt Sentinel’s redemptions [Reuters]
Crescendo of Awesomeness
Receiving a few more client-redemption requests than it would’ve preferred (which you’d think would be zero but is actually more like 2-3, just to keep things interesting), money-market fund Sentinel Management Group asked the U.S. Commodity Futures Trading Commission today to allow it to halt redemptions until those up top can get it together to honor investors’ demands for their money in a timely fashion, CNBC reports. In a letter to clients, Sentinel said, “We had previously thought that the market would return to some semblance of order and that our clients would not join the panic. Unfortunately, this has not been the case.”
If you have a notion as to what gave Sentinel the impression that its clients wouldn’t want to avoid losing money and that everything in the market would work itself out, send it to tips at dealbreaker dot com. Anyone offering anything slightly more elucidating than “That’s what always happened on Full House” and “it’s actually a little-known fact that Sentinel investors all live under one big rock, kind of like a group home” has a copy of Mergers and Acquisitions coming his way.
Update: Greg Newton writes:
This is (potentially) HUGE…While Sentinel is barely a pimple on the wider money-market world, and in the overall scheme of things insignificant in the futures markets, it operates in a specialized niche where the consequences of its failure may spread out of all proportion to its size.
Fund Halts Withdrawals [CNBC]