General Betting
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Premiumpayer wrote-The share price is on a slippery slope, down from 1550 in October last to 615 as I type. At this rate Betfair will be out of business in 3 months. They make big play of the fact that "All Betfair funds are 100% safe and secure. Betfair customers’ money is ring fenced which means that it is kept completely separate from Betfair’s other business accounts. This means you can have complete confidence in the security of your funds and your future with us." From one of their many adverts, this one for poker. However, if one looks at the Trust Deed, where one finds that the address of the Trustee and the address of Betfair are one and the same, one reads: "In the event of a shortfall of assets available for distribution to Customers, the Customers shall share in the shortfall in proportion to each of their shares in the Trust Fund."
So the "trustees" can invest your money as they see fit. Exactly the problem that affected the Maxwell Pensioners who lost most of their money. The money is not really ring-fenced at all. It should be in a 0% account, and always equal the sum of the account balances. And Betfair should change the text of the announcements to reflect that. I don't like the sound of that,when the share price is dropping like a stone,could someone cofirm all of our money is safe.
So the "trustees" can invest your money as they see fit. Exactly the problem that affected the Maxwell Pensioners who lost most of their money. The money is not really ring-fenced at all. It should be in a 0% account, and always equal the sum of the account balances. And Betfair should change the text of the announcements to reflect that. I don't like the sound of that,when the share price is dropping like a stone,could someone cofirm all of our money is safe.
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yes, and even if it is ring-fenced, how can you be sure that the Royal Bank(rupt) of Scotland will be around to pay it out following the next (upcoming) bank run? I don't believe the stress-testing has been "stressful" enough. It's scary stuff...I've taken up the policy of having only half of my bank in Betfair, the rest invested elsewhere.
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Nothing is 100 % safe, but I'd say our money is as close to 100 % safe as is possible.
For our money to be lost, first the bank(s) that are helding them would have to go bankrupt, Betair would have to start losing money, something they have never done maybe except in the very early days and as I think Betfair has no debt, they would also have to somehow spend or lose all their cash assets which I believe is something like 100 - 200 millions ? |
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Lmax and another share buy-back should take care of 100 million
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Wouldn't take long for a 100 million to go eddie
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As long as Betfair make a steady profit from their products, I'd say funds are as close to 100 % safe as they can get.
You don't need to start worrying until earnings drop significantly and we have another bank crisis emerging at the same time. |
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I sincerely doubt that BF can access customer balances in any manner at all, to fund any sort of corporate cash expenditures. For sure they can earn interest on them , but that's all.
Any lawyers out there capable of interpreting BF's trust fund details exactly and correctly for us non-legal types on here ? Or do we once again have to read all sort of conjecture and 1/2 correct info on here yet once again? I think Eddie's point about the only real risk to customers lies in the relevant interest paying entity going bust, that is the RBS or whoever it might be. But I would imagine BF has pretty well spread it all around a bit . |
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This has just happened to Full Tilt Poker, check it out...and they were massive...they may come back but probs not unless the takeover goes through...
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Customer funds are ring fenced and contrary to popular myth Betfair don't earn interest on them.
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I have been withdrawing my funds from Betfair for a couple of months now and only keep the bare minimum of cash in my account. There are several reasons for doing this, the first being I want to earn interest on it. I'm never going to physically use it all on the exchange so why keep it there? Secondly some of the security related discussions both here and elsewhere shook me slightly especially as I have had this problem before although thankfully not with Betfair and not for a large sum and thirdly because I don't trust myself not to make a really serious screw up. I've made many screw ups previously and the only thing that saved me was the fact that when they happened most of my funds were in the AUS wallet. What's the point in faffing around with sub-accounts - Same result as my first point.
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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. |
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Aye robot
Why is it a myth ? Proof please ? If BF doesn't get any interest on them, the who does ? Charities ? Or they just give to the banks interest free ? What am I missing here ? Getafix seems to have nailed the relevant company account info. |
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More to the point someone has posted elsewhere that the trust fund rules allow BF to invest in "--other investments " which, for lack of any relevant explanation, could mean literally anything.
That quite frankly worries me more than if and what amt. of interest they're earning on customer balances. |
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From this article from 2004 could somebody a tad more savvy explain the following to me:
The Royal Bank of Scotland treats the customer account as money that is subject to a legal trust. Therefore even if RBS were to be liquidated, Betfair’s customers (as beneficiaries of a trust) would be first in the queue at RBS. First in the queue? Or simply IN a queue? |
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BF has gotta put the money somewhere Rocket.
Under the bed is useless. I would imagine that it is spread out over a largish number of banks anyway, wouldn't you ? |
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Customer funds are ring fenced and contrary to popular myth Betfair don't earn interest on them.
Well who does? 300 million in an account is earning an awfull lot of interest for someone. |
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If you're right premium( and I'm no lawyer, but are you ?) then your point is well made and should be of great concern to all.
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http://www.betfair.com/aboutUs/Trust.Deed/
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(C) The Trustee is also entitled under the terms of the Trust to pay any Interest and Other Amounts out of the Trust Fund to the Company and to the Group Companies.
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Rocket
I can read ( surprised ?) but I'm not a lawyer and thus maybe I am interpreting the deed incorrectly. It would be nice to have a real trust lawyer opine on here about it, wouldn't it ? I get tired of all the amateur 1/2 cocked views and opinions on here all the time. As it reads to me I agree it appears to be weak in form and content. But as you quite often say to me , what do I know really ?. Not really arguing here btw. |
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5 Interest and Other Amounts
Customers are not entitled to receive any Interest or any Other Amounts. Interest and Other Amounts shall be held by the Trustee for the benefit of the Company and/or the Group Companies in such proportions as are agreed between them and notified to the Trustee from time to time. The Trustee shall be entitled to, and shall, pay Interest and any Other Amounts to the Company and/or Group Companies from time to time. |
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Both registered to the same address.
I won't pretend to know much about this sort of thing but is the fact that the trustee is essentially Betfair under a different name normal practice in the industry? |
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From the trust,
The Trustee is also entitled under the terms of the Trust to pay any Interest and Other Amounts out of the Trust Fund to the Company and to the Group Companies. BF gets the interest. And worryingly, it looks as if BF can take any money it likes out out of the trust. |
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5 Interest and Other Amounts
Customers are not entitled to receive any Interest or any Other Amounts. Interest and Other Amounts shall be held by the Trustee for the benefit of the Company and/or the Group Companies in such proportions as are agreed between them and notified to the Trustee from time to time. The Trustee shall be entitled to, and shall, pay Interest and any Other Amounts to the Company and/or Group Companies from time to time. |
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yes,same postcode and address Rocket ...wtf is that all about ?
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ooops snap
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Thanks Rocket and the rest.
Time to pull my funds out. |
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given that our money is invested in this fund, and that the wording seems to suggest that it can be invested in any 'Investment', I wonder if we should feel entitled to a statement showing exactly what this fund is invested in
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17 Additional Powers of Trustee
(a) power to invest the Trust Fund in any bank certificate, money market account, deposit account or in any other Investment; Investment means money market bank deposits, certificates of deposit, corporate bonds, commercial paper denominated in sterling, interests or participations or commitments in a limited partnership or other collective investment scheme (including, in particular, money market funds), derivative Instruments (including futures, options and contracts for differences) entered into for hedging purposes, and such other categories of investment as may from time to time be agreed by the Trustee on the one hand and the Banks on the other hand as being suitable investments for the Trust Fund on the basis (among other things) that they are low risk in nature; |
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Eh what?
Betfair can use our banks to invest in futures or any other investment they reckon fit ? If I hadn't already withdrawn I'd certainly be doing it now. It's all fine and well when a business is high flying. What about when the cracks and doubts start appearing? I hope somebody with some experience in this industry can help. Maybe some (ok, a very very few) of the posters in Financial could lend a hand with the technicals? |
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Any sharks, sorry I mean lawyers, out there ?
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12.2 In the event that the value of the assets within the Trust Fund falls below the aggregate of the values of each Customer's Share (a Shortfall), the rights of the Company and the Group Companies to withdraw assets pursuant to clause 12.1 shall be suspended until such time as the Shortfall ceases to exist.
I take that to mean that BF can only withdraw from the fund amounts that leave a balance greater than the aggregate of all customers' banks. the trust itself isn't ring-fenced, but the amount they need to pay everyone out is. personally this is low down my list of worries. |
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given that recent financial problems have largely involved so-called 'low risk' investments turning out not to be so low risk after all, I'd love to know what exactly meets their 'low risk' criteria
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Alright for you Viva, but you just don't have 100s of thousands with them as apparently all the rest of us on here do.
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Subversion
US treasuries perhaps ? Err perhaps we shouldn't go there ? |
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viva - yes, and the 'Other Amounts' that can be withdrawn seem to be defined specifically as 'monies... which are not part of a Customer's Share'
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I've got 11 grand in there fafh. peanuts to many on here, but not to me.
trap bets and fat fingers are a far greater concern. |
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Btw Sub, good to see you on here again.
Where have you been ? Making money as per usual I hope ? Or running around like a chicken with its head chopped off, like most of unfortunately are ( Menelaus excluded of course). |
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so it seems that there is decent protection against misappropriation of the funds, but possibly not such good protection against poor investment of the funds
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Is there eeven any such thing in today's climes ?
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