Market Overview

James Koutoulas Responds to Ann Barnhardt's Letter, Thinks She's Taking the "Easy Way Out," Advises Her to Fight


The CEO of Typhon Capital Management is speaking out on the widely-circulated letter from Barnhardt Capital Management's former leader.

Ann Barnhardt made quite a splash when she shared her true feelings about MF Global and the closure of her own firm, Barnhardt Capital Management.

“The reason for my decision to pull the plug was excruciatingly simple: I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not,” she wrote. “And this goes not just for my clients, but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. Given this sad reality, I could not in good conscience take one more step as a commodity broker, soliciting trades that I knew were unsafe or holding funds that I knew to be in jeopardy.”

Now James Koutoulas, the CEO of Typhon Capital Management and the co-founder of the Commodity Customer Coalition, is sharing his opinions on Ann Barnhardt's letter.

“I agree 100 percent with her [on the point that] I think the way everyone handled it initially was terrible, and it made matters worse,” Koutoulas told Benzinga during a recent interview. “As for [her second point about moral obligation to cease facilitation of access to futures markets], I honestly think that is taking the easy way out.”

“I think we've been courageous; we've stood in the face of all of these guys who have done things wrong and who have tried to screw over the customers,” Koutoulas added. “Sure, that's a hard thing to do, but I think that it's important for America to have futures markets.”

Moreover, Koutoulas said that it's important for the farmers who “go and hedge their risk,” and for Southwest Airlines (NYSE: LUV), “which has been able to maintain high profitability for three years of high oil prices because of their futures hedging program.”

“I think it's important that we use this situation as an opportunity to fix what is wrong with the system,” Koutoulas explained. “If we make enough noise, these people have to listen to us. We've come out with a message that, while there is some anger there – and with good reason – it's been a focused message and it's been solutions-oriented.”

Thus far, Koutoulas said that Judge Martin Glenn (of U.S. Bankruptcy Court in Manhattan) has been receptive “to what we have had to say; he's been reasonable. The trustee has sped up this recovery process. The CME has gone part of the way there with their $300 million guarantee.”

“I think, within a couple of days, the CME is going to be forced to step up and make customers whole,” Koutoulas continued. “Once that happens, we can talk about things like class actions to get people the damages back from forced liquidation, and all of that.”

Koutoulas said that while we can talk about “tweaking the regulations to eliminate the ability of firms to invest in repos,” he wants to make one thing clear: “I in no way think that other futures customers should have to pay for this particular situation.”

“I think it's the JP Morgans (NYSE: JPM), it's the holding company assets, it's Corzine and the other directors personally that should have to pay for this particular mess,” he said.

But he doesn't think that Barnhardt should give up so easily. “Look, Ann, don't quit,” Koutoulas advised. “It's an easy thing to quit. Stand up and fight. Make your voice heard and advocate on behalf of your customers, like what we are doing. We would be welcome to have her join our side if she were so inclined.”

Interview by Luke LaVanway and Matthew Boesler. Story by Louis Bedigian.

Follow me @LouisBedigian


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