Are our funds 100% ring fenced ??

"---you're making---"

+---more or less protective/defining ---"
It's too early for me at the moment.
Not my usual posting time window.

Presidente,

If the directors decide an investment is in the interests of BF shareholders, then that must be a sound investment for others including the trust.

I see a decision on behalf of shareholders and the trust as substantially the same thing. Ensuring others money is spent/invested wisely.

Otherewise it's all a pointles debate just for the sake of a debate.

----------

surprised you're not more enthusiastic about it then.

no, pxb, that doesn't follow at all. it's like saying that if an investment's in the interest of the company invested in, it must by definition also be in the interest of whoever's money is invested.

I'm guessing Nemesis is reading the follow ups to his post and banging his head off the monitor, slowly losing the will to live [:)]

FAFH

"It is of no apparent material interest or concern at all to the external investment community, whos study these things fairly closely"

Is this the same investment community that valued Betfair's IPO shares so badly?
Is this the same investment community that "studies these things fairly closely" but still does not understand how exchanges, let alone Betfair, works?

Obviously Betfair is concerned with the topic of this thread, and customer's attitudes expressed, to put up their lawyer in response.
That Betfair are at least communicating on real issues rather than tiresome public relations froth is justification alone for this thread.

Just Checking
23 Jul 11 13:34
Joined:  25 Jun 06 | Topic/replies: 7,265 | Blogger: Just Checking's blog
I'm guessing Nemesis is reading the follow ups to his post




Not a chance in hell.

Presidente,

Directors are responsible for how shareholder money is spent/invested. Their responsibility isn't to the company as such.

Neither of us are lawyers, so lets agree to differ on this.


I have Froggie blocked, but to answer his resposted (rhetorical) question.

The pc is a clever and subtle beast. And there will be very few outside bf and this forum who really understand what it is doing.

I would be astonished if any financial analyst understood its ramifications.

aye robot
Date Joined: 17 Jan 08
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When: 18 Jul 11 21:15
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| Topic/replies: 496 | Blogger: aye robot's blog
Customer funds are ring fenced and contrary to popular myth Betfair don't earn interest on them.


Getafix
Date Joined: 13 Jul 10
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When: 18 Jul 11 21:23
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maybe I misinterpret the annual results but at the bottom of page 12:

http://corporate.betfair.com/~/media/Files/B/Betfair/press-releases/2011/2011-06-29.pdf?

it quotes:

Revenue from the management of customer funds held on deposit in separate ring fenced accounts grew by 30.9% to £3.3m, reflecting the increase in the average level of customer deposits held during the period and a slightly higher interest rate environment.

Look at the balance sheets for "management of customer funds", looks to me they do earn interest.


As Getafix pointed out, Betfair obviously do receive interest payments from our funds!

I also was told in an email from Betfair that "Betfair also do not make any money on interest from customer's who leave their funds in their Betfair accounts.".

I think because there are different companies within the Betfair group, they say something like 'oh no, we don't get anything' because another company within the Betfair group gets that.

It's incredibly stupid that Betfair can misinform its customers like that and I think an apology is in order.

Hello there pxb.

Everyone has the right to feel how they feel about how secure their funds are. I've stated my stance, and i understand yours. I really can't be bothered with anymore arguing on the subject as it quickly becomes arguing for the sake of it.

You have stated on previous posts your location, apologies for remembering this, perhaps I should spend more time arguing and not reading other people's posts.

Anyway it saddens me that you resorted to stating that I have a financial arrangement with BF. I would happily deny it but i'm concerned that you would still not believe me even if I did. Please don't take this the wrong way but this is the best way I can prove to you that I have no financial connections to BF. I can only apologise for my rudeness.

You are a drongo.
Please take your money elsewhere and never place any bets with betfair ever again.

There how many employees would insult their customers and tell them not to use their service. I hope this is enough proof for you of my lack of connection to the company.

No hard feelings.

^ clearly a double bluff, and therefore proof UA is a shill.

For starters if you had a fund of £X gazillion pounds as a trustee you are sure as hell going to take Independent Financial Advice as to what to do with that money. Given that returns on the money is not important it is the security of that money the IFA is certainly not going to recommend that the overwhelming majority of this money does not go into anything but the most secure of investments.

Afterwards you are within the realms of the FSA and all of their regulations.

UA, for someone who is now implying you are now a regular Aussie punter, you are remarkably well informed about the UK regulatory environment.

And I'm pretty sure I only ever refer to my location on the cricket forum.

Hey up there pxb, i wasn't aware that I had ever implied that I was an Aussie punter. I'm not by the way in case you were wondering.

As for you referring to your location I recall that when Betfair advertised a job on the general betting forum you stated that you would have been a good candidate for the job apart from the fact that you lived 8 time zones away. I'm fairly sure you have made other references to Aussie markets you bet in as well.

I think you referred to Perth at one point, i do hope you live there. Perth's a very nice place, unless you like your wine and a slightly quieter life then Margaret River is a good place to be.

How would all this ring fencing business work if any big hitting customers had some sort of credit facility. Which has been rumoured but may or may not be true.

PXB - you might want to review your statement "And I'm pretty sure I only ever refer to my location on the cricket forum." made on 24 July 11 at 01:09.

You stated the following on another thread about beating the clock on the General Forum made on 23 July 11 at 15.24

"about BF;s license in OZ specifically prevents them trading in their own markets (so I understand).

Next time there is an international game at the WACA I might go down and see if it is happening here."

Hope this helps.

Siverback
Then I would assume that BF would have a specific charge over the specific monies held in BF accounts by those customers at any specific time.
Don't see how it would have any actual or potential negative effects the ring fencing ofmonies of non-credit customers.
Do you see it differently ?

It would if they offered it to every customer.

Not likely but I thought that was how those things were accounted for.

I just came back to read some of the responses here and see that there has been a mix of quality in those responses (including the obligatory lawyer bashing). My forehead is now swollen from banging my keyboard and screen in frustration :P

To be very clear:

(1) Nno money on deposit anywhere is 100% safe because banks can go bust though I believe we have done all we can to "100% ring-fence" and protect client funds, spread risk and make good investment decisions. If you're not happy take your money out - bury it somewhere in WA if you want - no really - go ahead.

(2) We do have a madate for the investment of client funds that is managed by our Finance Team. I've asked and they would rather not share that with the world. If not convinced see my final sentence in numbered paragraph 1 above.

(3) We do make interest on client funds. If someone on Helpdesk (or similar level of authority) has said differently they are wrong and should be corrected. As previously mentioned we have considered paying interest back to customers but we can't or we'd require (very onerous) FSA regulation. So we keep the money and use it to offset transfer changes/foreign currency exchange risk etc then we sure do pocket any profit (do let me know if some other bookies are paying interest on funds they hold in their company accounts).

(4) Group companies are also beneficiaries of the trust to the tune of the funds owed to them in fees for the services they provide. This is why they take out funds each month and the trust deed explains this. It makes it pretty clear that the trustee can take customer money to pay for the fees incurred to group companies. What can't happen (without fraud etc) is that the company just takes (say for some alterior purpose) money from the trust in excess of what is owed to group companies.

(5) I believe I have responded to the independent trustee point. We've looked at this and it has been resolved as I've mentioned. I have set out below verbatim an email I sent several years ago - I spoke to the person and she basically said that having independent trustees was not without complications and in the the circumstances it wasn't the right move. I'll revisit this if anyone out there has a better idea and some people who are prepared to perform the role who are better suited than Ed and Morana (as previously mentioned). Though ultimately if you're still into conspiracy and assuming Betfair is going to screw you and take your client money please refer to the final sentence of numbered paragraph 1 above.

From: Justin Hubble
Sent: Monday, October 13, 2008 12:46 PM
To: XXXX.co.uk'
Subject: Independent trustee services

XXX,

I was given your name by our solicitors (Freshfields).

Our trustee company TSE (Clients) Limited holds considerable sums in trust relating to our customers (about £220m). At present the directors of the trustee company (which is a wholly owned subsidiary of the group parent companies) are key individual shareholders of the group’s business. We are interested in ensuring that our customer funds are protected and properly administered in a fair an independent fashion. It may be that an independent board of trustees could assist us.

I’d very much like a chance to discuss the situation with you whether by phone or in person with a view to seeing whether the Law Debenture Trust Corporation could assist us. Please let me know when would be a good time for you.

Kind regards,
Justin Hubble LLM
Head of Legal

Nemesis, I have a question for you, but would firt like to say that I am not concered about my money here and don't think there is any reason at the moment for anyone to fear for their funds.

The question is :
  If the bank/banks where our ringfenced money are kept went bust, would we still have a legal claim for our money against Betfair or is our contract regarding our funds between us and the bank/banks ?

@Eddie

If the banks went bust you would only have a claim against Betfair if you could show that Betfair acted improperly such as by (negligently) putting the money with banks that were clearly shakey. If the trustees made perfectly legitimate decisions in relation to the funds they would be in the clear i.e. customers would not have a claim against them and they'd need to look to the bank(s). So to be clear the answer to your question is "no - you would not have a legal claim against the trustees unless you could show negligence".

However:

(1) You may be able to trace the funds that the bank lost to their ultimate recipient and get them back that way. We/you would argue that the funds in question did not form part of the bank's assets because they are subject to the trust (i.e. we would try to stop the bank's liquidators taking the money and claw it back to give to customers).

(2) For reputational reasons, even if entirely without fault, Betfair may elect to make good out of its own funds (assuming it hadn't also lost those when the banks went under). It would be under no obligation to do so though if you recall what happened in the case of Sporting Options you'll have some idea how we think about such things.

Put very simply it is a really bad scene if (all) the banks in which client funds are held go bust and there isn't a great deal that can be done about this - whereas Betfair going bust is a much better situation for customers to be in so far as getting their money back is concerned.

I hope that adequately answers your question.

Thank you for a fast and honest reply and as things are now I feel sure Betfair would feel responsibel for their customers money, but in the future if Betfair go on a decline it's good to know where we stand.

  We have probably agreed to this sometime when we accepted terms, but I think close to 0 % of your customers were aware of the fact that you are not obliged to pay out our money if the bank/banks where our money is held went bust.

And I suppose Betfair don't use the same bank/banks for it's money (£ 155 millions) as they use to ringfence our money(£ 305 millions)

If you are I would recommend you change that policy as fast as possible !

You stated the following on another thread about beating the clock on the General Forum made on 23 July 11 at 15.24

"about BF;s license in OZ specifically prevents them trading in their own markets (so I understand).

Next time there is an international game at the WACA I might go down and see if it is happening here."

23 Jul 11 10:58 Joined: 21 Dec 10 | Topic/replies: 227 | Blogger: U.A.'s blog
I think you are being a bit too simplistic.

For starters if you had a fund of £X gazillion pounds as a trustee you are sure as hell going to take Independent Financial Advice as to what to do with that money. Given that returns on the money is not important it is the security of that money the IFA is certainly not going to recommend that the overwhelming majority of this money does not go into anything but the most secure of investments.

Afterwards you are within the realms of the FSA and all of their regulations.

As well as this you have the person who created the trust saying that the funds are 100% ringfenced. Unless you can get them to give you the money and you bury it out in a desert in Western Australia the location of which only you know, you are not going to get much more assurance than what you already have that your money is safe.

UA, you must be the proud possessor of a time machine, because my post was made 5 hours after you made your WA reference.

Its rather more plausible you are a BF employee and you peeked at my personal details.

Justin is sounding less like a lawyer every minute and more like a very frustrated person unbelieving at the total general idiocy of many of the argument points being raised on here.
And you know what ?
I don't blame him for a minute, though I might think his BoD might not perhaps feel that he is being overly wise in even acknowledging the legitimacy of aome of them, by responding at all.
I'm in fact a bit surprised that his last detailed response ever even happened.

true fafh, its refreshing to hear from someone that does know whats what like jason and I love how the moaners flee and fluster in his quake lol

nothing like a bit of authority to calm the masses!

UA
Many of us on here have been fully aware of pxb's location for a long time, either indirectly deducing ir from many comments he has made on here, and/or also from his direct references to it.
I remember once for example he complained about BF not puttung up markets referring to the exact time zone in Australia he was looking at the BF screen from and so on and so on.
In fact truth be told I think he lives in some make believe world going by the name of Walter Mitty.

Seems to be the opposite though on here Bff, which just shows the absolute myopia many on here have when addressing any and all BF related issues,
Their bias and total ignorance of what they are talking about is breathtaking.

If you're not happy take your money out - bury it somewhere in WA if you want - no really - go ahead.

Nemesis, curious you would make the same geographic reference directed at me as UA.

Banks going bust is still the  same red herring.

The substantive issue which you avoided, is what constraints exist on the trust making investments in BF's business activities.

That is where the main risk exists.

The other significant issue which you have also avoided is that BF receives all the gains (profits) from the trust but customers bear all the loses.

What constraints exist on the trust as far the level of risk of its investments.

I'll hazard the answer to both questions is 'None'.

And as for your suggestion above, I have already started transfering my funds to fields somewhat greener than the red dust of outback WA.

Finally, the disdain you have shown for your customer's genuine concerns in this thread speaks volumes about BF's corporate culture.

I know, it amazes me how little i knew about any logical arguement concerning an exchange and its issues when conversing with the boffins on here, a large section of roomies on here have led me to the virtues of the lemming and I have been looking at where all the local cliffs are and there heights now summer is in full swing

Not always though, that is when they talk about and stick to technical gambling matters they make many good points that BF should take on board, but at most other times they go completely off the rails seemingly driven by some intense personal, irrational hatred of BF.

I absolutely reat my case on pxb though.
He is as mad as a march hare.

"--- rest my case on pxb---"

I agree totally, there are raised some really relavant issues on here and thats when some constructive critisism can emerge, but there are some that make you feel your just banging your head against a wall just because they must know everything better, debate for them just gets in the way of something that turns into a good "lie down and talk to the shrink session" which I dont have the time for(discounting the time I waste on here of course).[;)]

if they dont like betfair then what the bloody hell are they doing on here!

cant work pxb out, does he like marmite or hate it, do they have marmite over there even, maybe its in his account details, hmmm

If I wasn't on BF doing other things betting wise a lot of the time, then the forum would be a total waste.
However, I do find it quite illuminating at times and have in fact learnt quite a few very interesting things from reading it.
But what you have to wade through to get to this nuggets of gold is pretty unbelievable.
And to a large extent, in my case, the pain is self-induced by my being unable to resist pulling so many of their chains so regularly.
A very bad personal fault of mine, not only on here but everywhere else in general, I have to admit.

Vegemite not marmite.
Don't try taking on a nation bff.

We do have a madate for the investment of client funds that is managed by our Finance Team

justin, could you please clear this issue up regarding your australian customers. the tasmanian legislation for betfair  states -



(b) the wagering funds of registered players must be held in trust by the licensed provider (or by an agent of the licensed provider approved by the Commission) and must not be disbursed or otherwise dealt with except as authorised under this Act or as the Commission, by instrument in writing, from time to time authorises;

(c) for the purposes of paragraph (b), an account used for the licensed provider's Tasmanian betting exchange operations must –

    (i) not be used for any other purposes; and

    (ii) be maintained with an authorised deposit-taking institution that carries on business in Australia, at a branch or office of that institution that is physically located in Tasmania; and

    (iii) be independently audited at least once every 12 months, and at such other times as the Commission may instruct;


thanks.

Ffs.
Just read his posts iz.

thanks for your contribution fafh.......

Sporting Options......

@pxb

Answers:

(1) I read the reference to burying money in WA and elected to use that example.

(2) Trust money is not invested in Betfair business activities. It is invested in low risk investments in a wide range of areas in line with the mandate Finance use for trust fund investment decisions.

(3) As I have repeated said: Betfair does receive gains from interest on customer funds - but I fail to see how customers suffer losses. What losses? If you mean the losses in the hypothetical scenario that all the banks go bust then yes of course that is a risk and I believe I've been pretty clear in explaining that (as well as the possible consequences). The constraints on the trust are in the mandate document that Finance use to make investments and no you can't see that.

As to the suggestion that I have somehow shown disdain for Betfair's customers genuine concerns I am truly perplexed. In fact I am gobsmacked. I have gone to quite some trouble to respond fully and fairly to those very concerns precisely because I do care about customer concerns - specifically here allaying them and seeing that they don't result in myth. I have shown no distain whatsoever though I certainly now see a possible reason why other senior managers have elected not to wade into the forums to spend time negating unfounded fears. I shall not lightly do so again.

Regarding (3), he could mean losses that could incure if these low risk investments suddenly went awfully wrong.

Nemesis.

Point 2, irrelevant (and you know it)

The issue is what in the trust doc prevents such investments.

Point 3, doubtless in some narrow sense this is true. You are after all a lawyer. However, you have already stated 'We do make interest on client funds'.

Client funds invested in the safest of investments will be generating well in excess of 10 million a year and if it doesn't go to customers and it doesn't go to Betfair, where does it go?

And as for,

but I fail to see how customers suffer losses

All investments without exception carry the risk of loss of part or all of the investment.


Its late here and you are clearly not interested in answering substantive questions.

And I'm waiting for a response from the Tasmania GC to several of these questions.

@pxb

I should have remembered the saying: Do not argue with an idiot. He will drag you down to his level and beat you with experience.

PXB - you seem to have a fixation on people tapping into your account and finding info out about you, and betfair secretly planning to steal all your money. Ah the conspiracy theories, oh how they make it so exciting, do you feel really important, thinking people are moitoring you. Let's face it no-one is monitoring you no-one cares, no-one........oh cr@p, Nemesis may have named himself after a ride at Thorpe Park but he's right, why bother.

Just relax and get yourself down Cottesloe. No-one is monitoring you.

Nemesis was a she ?

And pxb please stay down for your own good self.
You're punching above your weight on this.

@pxb

I should have remembered the saying: Do not argue with an idiot. He will drag you down to his level and beat you with experience.

nemesis thats one of my favorite sayings along with "theres no fool quite like a sure fool"
which angles along the plane that those that cant change there mind don't have one to change.

we can learn much from the simple common tree because if we don't bend with the wind of change, then we may easily be blown down and uprooted!

(2) We do have a madate for the investment of client funds that is managed by our Finance Team. I've asked and they would rather not share that with the world. If not convinced see my final sentence in numbered paragraph 1 above.

----------------

for all the chaff and scaremongering, this imo is the substantive issue that remains here.

on what grounds do they not wish to share the mandate?

no one's asking for them to disclose specific investment strategies, merely what level of risk is deemed acceptable when investing large amounts of other people's money.

I think the statement made in the first post by Mr Hubble that funds are invested in low yielding deposits in a wide array AA + banks is adequate info for any reasonable person.
Unless he is blatantly lying this means that they are not running some sort of high yielding investment operation in the trust fund.
Do you perhaps think that GS ( its prime underwriter wasn't it) is selling them high yield derivatives or something exotic like that ?
Do you think they're speculating in FX ?
what exactly is even of potential concern to you ?

FAFH, you're turning more and more into an automated Betfair defender and no start to say things you surely can't mean or do you think it's ok to keep the investing mandate a secret to those who own the funds and take all the risks with these investments ?

  I don't think Betfair are taking high risk with our money, but there is imo no reason to keep the the investing mandate a secret to us, in fact I even doubt if it's legal to keep it a secret unless we have specificially agreed to it when accepting their t & c's.

my concern is there's a clear, albeit currently latent, conflict of interest, which BF aren't addressing.

BF takes all the interest on these investments whilst providing only a proportion of the capital. it's effectively in a highly leveraged position thanks to other people's money.

at the moment, given its cash pile and profitable status, that conflict is latent because they have a far greater interest in the security of the investments than in maximising the return on them. but in changed circumstances  that would not necessarily be the case.

therefore it would make sense for them to have clear explicit protections written into the trust deeds to prevent such a situation arising and dispel any lack confidence in customers whose money they are investing.

please note: I'm not accusing anyone of anything, either explicitly or by innuendo. a conflict of interest is purely a structural state of affairs, not an act of wrongdoing on anyone's part.

Covering yourself against a banning eh viva?

OK Viva.
Give me an example of the sort of conflict of interest that you could even conceptually see arising to the trustees in investing funds in a range of low yielding deposits in AA+ banks ?.
Also , to bring all this down to a practical day to day level, does any of this even remotely affect your comfort level re putting your funds with BF and gambling with them, as opposed to putting them with another competitor and gambling with them there ?
And if it doesn't, then why on earth are you bringing it up ?

bit disappointed on that score, actually. I was first to be kicked off in 2008, so first off for PC2 comment would have been a historic double.

actually, though, it's an important distinction to make, I think. I don't want to be seen to be implying any wrongdoing, because I don't believe there is any and it's unfair to talk about this without making that clear.

incidentally, I'm guessing that this is of particular interest to you, given that what you do requires working with a very large bank. what's your take?

Viva
If you have real substantive concerns, I doubt whether BF would ban you for expressing them on her.
The question thus is, do you have such substantive concerns, or are you just being disingenuous and alarmist ?
Let's give you the benrfit of the doubt on this.
So I would still like to hear the real substance of your concerns, as I am having trouble imagining what they are.

why are you struggling to see what they are, when I've spelled them out?

there's a structural conflict of interest as things stand. what about that don't you understand?

Lest we forget, it's not that long ago these city simpletons thought they had found a way to "eliminate risk". One fool's low investment risk is another man's pension.

You'll have to spell it out viva I'm afraid.
All I see is normal structural risks associated with all trust deeds in general.
That is the basic competence and honesty of the trustees, both company appointed and independent.
What else do you see ?

Feck
Indirectly you have hit the nail on the head.
You cannot ever eliminate risk in totality.
Naive to think so.
I'm more interested in viva's perception of some sort conflict of interest having a potential impact in the specific area of my trust in BF handling my funds correctly.

Btw viva there could very well be sonmething I'm not seeing.
Just spell it out ( in layman terms), that's all I'm asking.

Nemesis

When: 27 Jul 11 15:52


As to the suggestion that I have somehow shown disdain for Betfair's customers genuine concerns I am truly perplexed.

Nemesis
When: 27 Jul 11 17:03

@pxb

I should have remembered the saying: Do not argue with an idiot. He will drag you down to his level and beat you with experience.

I thought the saying was "The customer is always right"

Thanks for taking the time to post with good information Nemesis.

Bit harsh on pxb though...

Viva, I'm not concerned about this. I find the prospect of being hacked and someone placing crazy bets on my account much more dangerous.

Harsh but true.
The guy is with the pixies most of the time.

sigh. okay, once more:

customers do not receive interest on trust investments (for legitmiate reasons). therefore, their interest is for the investments is to be as safe (ie low yield) as possible.

the company does receive interest. therefore if people from the company decide on trust investments because they're also trustees, their two different roles create a conflict of interest.

in addition, if the trustees have a personal material interest in the performance of the share price, there is an additional potential conflict of interest, because higher performing investments will affect profits and therefore the value of their shares/options.

again, to stress: this is a description of structure, not any allegation of impropriety. but it's something that seemingly hasn't been explicitly addressed through written safeguards, and imo it should have been.

Investor
You must be reading my mind.
I was just about to post that up.
I really would like more assurance from BF that if my account on here is genuinely hacked, then I will not suffer in any form or manner.
I think that area should be of much more concern to any and all on here.
It could affect small and big account holders indiscriminately.

It all boils down to trust Viva, not conflict of interest.

@investor - I agree. it's low down my list of things to worry about. not least because whilst BF remains profitable and has its own cash pile, the trustees interests dovetail with those of cutomers. which will surely remain the case for the forseeable future, barring something from out of left field.

as stated way back in the thread, I'm much more worried by my own potential fat fingered fvckups, followed by hacking. I'd take a hardware dongle over rewritten deeds any day.

no, fafh - that's completely wrong. conflict of interest has nothing to do with trust, it's a description of structure.

For example you could put in some explcit wording along the lines that you will always put the interests of the trust before that of the company etc etc, but it's implicit anyway, and whether implicit or explicit it can still  alwaysbe abused by untrustworthy office bearers.
I repeat my earlier practical question.
Does it worry you to the point of not feeling comfortable to put your funds wirh BF for betting purposes. ?
Or are you saying not at the moment because your account funds are not large enough, but if they were ever to become greater then you would be worried ?
Cross bridges if and when you get to them maybe a more practical way forward, rather than raising spurious alarmist concerns on here ?
There are a lot of innocents who read this forum, and you are just putting stupid, irrelevant thoughts into their heads.
What meaningful purpose that serves I have no earthly idea.

It doesn't worry me at present, no. it would do more if BF was carrying its own debt load or in any kind of a situation where it was less master of its own financial fortunes.

and I've got to say it's pretty pathetic of you to start accusing me of some kind of scaremongering, for spelling out something you've asked me to clarify, and which is factually true and deliberately phrased to put it in perspective.

this is exactly the kind of stuff that makes you look like a corporate shill.

Oh come on viva.
That's not like you to hide behind such a ridiculous accusation.
You're one of the better, if not the best, wordsmiths on here.

Btw if I was a corporate shill, what do you think they should be paying me ?
I seem to be doing a lot more harm on here than good.
Perhaps they shuld be paying me to stop posting and getting in everybody's face ?

FAFH, you surely are blinded by your admiration of the Betfair system if you don't see that there is a possible conflict of interest in Betfair employees deciding where our funds are invested and Betfair benefits from these capital gains while we, the costomers take all the risk in these investments.

  Can you give me a good reason for Betfair to keep the investment mandate for our funds a secret to us ?

If I (as a private individual) was given the oppurtunity to invest in whatever I wanted, and somebody else (not somebody I care for) promised to cover the loss in the event of negative return, then I would go for a very risky investment indeed. If there was a limit on how much risk I was allowed to take, then I would go for the maximum risk allowed.

I give up.
You guys are simply on a different planet to me.
I live in the real world, worried about real matters that have real material impact on my life.
You apparently don't.
I don't worry about things that to all intents and purposes are totally hypothetical and immaterial.
I just don't understand how  any of you can be successful gamblers given your apparent predilection for creating artificial or imaginary hurdles in your small lives.
It must be a sorry state, this world of imaginary persecution and paranoia you appear to dwell in.
You all have my deepest sympathies.

This coming from the guy who won't bet with the best sportsbook in the world because it's based in a country he doesn't like.

FAFH, I'm not sure you can say you live in a real world if you deny there can be a possible conflict of interest in Betfair handling the invetments of our funds.
  Do you still deny this ?

Any shareholder/trustee is massively incentivised not to muck about with the trust. If I held, say, £80m in stock and was one of the trustees the last thing I'd want to do is lose a pile of customer money and destroy the company. OK, there might be the odd million quid to make in interest (you can see exactly how much in the recently published results probably) and so on but it's nothing compared to the continual growth and success of the firm. I honestly don't see a conflict unless you believe the trustees are nutters who only think about the coming quarter.

In the situation where the company has taken on a load of debt to, say, buy some competitors out or open a chain of hat shops or whatever, then there's even less reason to risk losing the customers that will end up paying that debt off.

Wow, i have to agree with Froggy on this one.

If the trust suddenly started to invest in stuff that was high risk then they would be in breach on the trust, breaking the law. Do you think it would be a little suspicious if the trustees suddenly said right "let's ditch this Standard & Poor's AA+ rating criteria and look at CCC investment options. The simple conflict of interest is the interest of self profit and breaking the law. Whoever was in charge of this money, the same conflict of interest would be there, breaking the law vs self profit. It's exactly the same kind of conflict that there is for all employees of betfair that have password access.

I do enjoy the irony of people bemoaning how BF don't come on the forums and defend themselves and then when they do it doesn't matter what they say it's never good enough. Hmm i wonder why they don't seem to do it much.

Likewise I also enjoy these "oh you agree with betfair you must be a schill/work for them" arguments. It's the same as me saying "oh you are moaning about BF, then you must work for bet duck". Hang on is it true that people can agree or disagree with BF policies they have and not work for them or their competitors. No surely not, i don't believe it.

Right that's enough from me im off to pick up my BF paycheque.

@Viva

I see your point and this is why we have previously considered having an independent trustee (see previous posts as to why that didn't happen). But consider these scenarios, in each case being situations where you put your money on deposit somewhere/anywhere other than in a chest under your bed or similar:

IN THE BANK

What happens if the bank makes bad investment decisions/over extends itself and goes bust? That money is in a bank accounts owned by the bank and it is not in trust - it is contractually owed to you. Well we've seen what happens when banks go bust and we know that the answer is you can lose your money if that bank is not bailed out.  You will however have some cover under the Financial Services Compensation Scheme (up to a cap of about £85k I believe).

WITH A TRADITIONAL BOOKMAKER (or similar)

Your money is likely to form part of the assets of the company as it will (probably) be sitting in a company account. If the company goes bust the liquidator will come and take the money and distribute it to creditors according to their priority (which will probably be a lendor with a fixed or floating charge over the bookie's assets - particularly if that bookie has debt which of course requires security).

IN A TRUST (e.g. the Betfair Trust)

Your money does not form part of the assets of the company - it is held in trust on equitable terms rather than contractual terms. If Betfair goes bust it doesn't matter. If the trustees "invest" your money poorly you may have a claim against them so they are incentivised to be conservative. If they are conservative but still mess up and the banks they have invested money with go under then you have a problem BUT at least the money will not form part of the assets of the bank either because it is still subject to the trust no matter where it sits.

Lets be clear - customer money sits in a variety of bank accounts with reputable banks/financial institutions according to the mandate the Finance Team. It sits in accounts that are in the name of the trustee so the funds remain subject to the trust deed. It does not, by virtue of being an "investment" (which will generally mean a deposit into an account that pays interest), form part of the assets of the entity with which it is invested - it will remain in the name of the trustee subject to the trust arrangement.

I note that in the last mentioned scenario you should also be aware that Betfair's arrangement with its banks is such that if trust funds drop to a point where the total amount on trust is less than the total amount payable to customers PLUS an agreed buffer (which is in the millions) then the banks may be able to trigger certain rights to take control of the funds owed to Betfair companies (i.e. the portion of the trust payable to Betfair companies for services - see clause 7 of the Trust Deed which makes it clear that the bank's share is in priority to our share of trust funds - but no more than that i.e. the bank can't chop into the share of the trust that is owed to customers).

In other words we need to have more money in the trust (i.e. sitting on deposit in accounts with banks as "investments") than all the money owed to our customers PLUS the buffer I refer to (which the bank can increase if it gets edgy). This is why we refer to "ring-fencing".

In these circumstances it has not been possible for me to think of a scenario that results in a loss of money for customers other than multiple banks going bust (all at once) or serious fraud (which would give rise to other claims).

No arrangement for the deposit of funds is completely perfect to the point where you can never be at any risk of losing your funds but, in the circumstances, my considered view is that Betfair's trust arrangement is pretty damn good at protecting customer funds. Probably even one up on a chest under the bed which, after all, could be burgled or taken from you at gunpoint.

This does not get away from the fact that having Board Directors as trustees is not completely ideal from a conflict perspective but again, please see my explanation of why this is so.

Nor does this get away from the hypothetical scenario that Betfair falls on hard times and seeks to use customer money to make higher returns to make profits. However, if you keep in mind the kinds of returns we make from interest on desposits of customer funds (low) as against the kinds of returns from core business activity (high), you should come to the conclusion that making risky investments of customer money wouldn't be very effective nor very clever. This is particularly true if one is actively dis-incentivised from exposure to risk (as our Trustees are when it comes to dealings in client funds for reasons I hope are obvious).

We are all going to die at some stage. Stop worrying about it.

If you die they bleed your account dry with their dormant account charge rather than contact your next of kin. Yet Nemesis claims they haven't yet fell on hard times.

[:D]

So pxb has been banned it seems?

Only for stupidity perhaps.
It's more likely that he is just AWOL whilst penning his submission to the Int'l Court of Justice complaining about an abuse of his human rights.
Also of course simultaneously carrying on an in-depth dialogue with the Tasmanian Gambling Board.
The boy is probably real busy at the moment, so perhaps it would be best not to disturb him.

His profile has been disabled FAFH.
http://community.betfair.com/pxb/go/shield/disabledProfile

As if being called an idiot wasn't punishment enough

I suppose Justin didn't like his sleazy lawyer insinuations then ?
If they banned people just for being an idiot, where would that leave the forum ?.

I think it's fine to be an idiot on this forum as long as you don't annoy the wrong people.

well, tbf pxb had been sailing pretty close to the wind on a few other threads too.

But probably no more or less than many others.
I'm surprised to be quite honest.
I didn't think that most of his posts warranted any serious consideration let alone concern.
Bit like mine in fact.

"I'm afraid that means sweet fa, because bf can withdraw the any and all the customer funds whenever they like."

I think stuff like that probably put him over the edge. I mean,  that just isn't true, and I can understand BF not wanting to provide a platform for someone to say it.

FINE AS FROG HAIR
28 Jul 11 22:52
Joined:  12 Mar 07 | Topic/replies: 3,717 | Blogger: FINE AS FROG HAIR's blog
Investor
You must be reading my mind.
I was just about to post that up.
I really would like more assurance from BF that if my account on here is genuinely hacked, then I will not suffer in any form or manner.



You've got a long wait ahead of you FAFH

Nemesis and UA,

You made those comments directed against PXB after you had him banned from the forum and therefore unable to respond.

Don't you think you that proves PXB's point about BF's disdain for their customers.

Hello there rolo2

As i mentioned previously I have no connection paid/unpaid to Betfair (the paycheque comment was tongue and cheek by the way). I had nothing to do with getting him banned. As for BF's disdain for their customers, I can't answer that as I don't work for them.

I have no problems with PXB, good luck to him I hope that he is continuing to make a profit, my only issue is when I try to give an alternative argument it's more about how i'm a schill. I find that a little boring personally.

I think I missed PXB's point about BF's disdain for their customers, I thought he was arguing about the security of his money within the company. What are your thoughts about it all then rolo2?