Sentinel Management Group, a futures commission merchant, filed for Chapter 11. The fund has too many redemption requests and its portfolio had dropped sharply in value. The fund may now be able to restructure is debt and keep customers from taking out asset. At least for the time being.
The mess at the fund has to concern the market, because there are likely many other funds with similar problems. The Fed’s rate cut may have helped debt markets and the stock indices for a day, but problems in the mortage markets may get worse as more and more variable rate mortgages become fixed.
The market is likely to receive another series of blows in the form of news about other pools of capital that have become troubled by making wrong bets.
And, that means Sentinel is not the last firm to go bankrupt.
Douglas A. McIntyre