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Suspended Redemptions

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Suddenly I'm hearing "suspended redemptions" all over the shop. I suppose it's an anodyne way of saying, "sorry, we lost your money--sucker!" I guess we're expected to regard these "suspensions" as temporary.

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SYDNEY, July 26 (Reuters) - A second Australian hedge fund has become caught up in the subprime mortgage fallout, with Absolute Capital telling investors it has suspended withdrawals from two funds until October due to a lack of liquidity in structured credit markets...

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July 31 (Bloomberg) -- Bear Stearns Cos., manager of two hedge funds that collapsed last month, halted redemptions from a third fund after a slump in credit markets prompted investors to demand their money back...

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United Capital Asset Management, the Florida-based fund manager, has suspended redemptions from four of its funds in reaction to a spike in redemption requests...

And so on....

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Suddenly I'm hearing "suspended redemptions" all over the shop. I suppose it's an anodyne way of saying, "sorry, we lost your money--sucker!" I guess we're expected to regard these "suspensions" as temporary.

Link

Link

Link

And so on....

Isn't that a fancy way of saying "theft"?

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Slightly OT:

I'm not sure if this is standard T&C's for most banks and building society's but the Coventry BS can suspend the rights of its customers to withdrawl their money. This was part of their updated T&C's issued earlier in the year. If they did run into problems due to their irresponsible lending practices you would not be allowed to get your money out.

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Suspended redemptions occur when their is insufficient liquidity in the underlying instruments that a fund has invested in. Another way of putting it is that if the fund tried to sell enough assets to meet redemption calls the market in those assets would collapse as there woul dbe insufficient bidders.

In this case the market in CDOs is in a virtual collapse as there has not yet been mass selling. The mass selling is yet to be seen when these funds do eventually liquidate. They cannot hold on to investor money for ever.

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Suspended redemptions occur when their is insufficient liquidity in the underlying instruments that a fund has invested in. Another way of putting it is that if the fund tried to sell enough assets to meet redemption calls the market in those assets would collapse as there woul dbe insufficient bidders.

In this case the market in CDOs is in a virtual collapse as there has not yet been mass selling. The mass selling is yet to be seen when these funds do eventually liquidate. They cannot hold on to investor money for ever.

Unless Fanny Mae and the rest come along and bail it all out...

http://www.bloomberg.com/apps/news?pid=206...&refer=home

:angry: :angry:

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Slightly OT:

I'm not sure if this is standard T&C's for most banks and building society's but the Coventry BS can suspend the rights of its customers to withdrawl their money. This was part of their updated T&C's issued earlier in the year. If they did run into problems due to their irresponsible lending practices you would not be allowed to get your money out.

Of course. This is the only reason why a bank can exist: they don't have to give you your money when everyon else also wants it back (because they don't have it!). It's also called the 'fractional reserve system' and is in the opinion of some here the greatest scam ever.

Edited by Goldfinger

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