FCStone to post bad debt provision
In a conference call on 4 November 2008, Pete Anderson, president and chief executive officer of FCStone, said the company was taking appropriate actions in response to the issue. However, further losses have not yet been ruled out by the company.
It may be possible for the firm to recover some of the loss from the introducing broker under a sharing agreement, but it could not provide details on the amount and timing of recovery.
The company has added to its internal credit risk management staff, in response to the issue, and has undertaken a complete review of its clearing customers’ accounts. It has also employed an external consultant to review risk procedures, processes and systems within the firm.
FCStone has no other accounts with a similar level of exposure or risk to the energy trading account, according to Anderson. He added: “We dropped the ball with this account but the rest of the book of our business is sound and adequately margined.”
FCStone is due to announce its fiscal year end and fourth quarter 2008 results on Thursday 13 November 2008.
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