David McElroy

Four months ago, I watched in fascination as a coal mine operator made a snap decision in a public meeting not to open a mine. It reminded me of a scene out of “Atlas Shrugged.” This week, a hedge broker shut her company down — and left a letter for her clients and friends making it clear that Atlas is shrugging.

Ann Barnhardt has operated an independent futures brokerage just south of Denver for the past six years. On Thursday, though, she posted a letter for “Clients, Industry Colleagues and Friends of Barnhardt Capital Management” announcing that her company had shut down, effective immediately. She was very clear about her reasons:

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. 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.

MF Global is the company run by politically connected former U.S. Sen. Jon Corzine. It filed for bankruptcy last month amid various kinds of serious problems, the most serious of which is $600 million in missing client money. Not only is that money missing — and probably gone forever — but the people with accounts at the firm had their accounts frozen by regulators, who wouldn’t allow them to withdraw their own money. This insider theft of customer money — and regulatory co-operation in keeping customers from getting to the rest of their cash — was more than Barnhardt could take. She had to walk away from a corrupt system.

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Some turkeys are working on their survival plans right about now, because millions of people are having them over for dinner next Thursday.

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Insider trading is considered such a serious offense by the federal government that it routinely prosecutes people and sends them to jail for it — unless you’re a member of Congress, in which case the rules don’t seem to apply.

Spencer Bachus is a Republican congressman from the district in Alabama where I live. I’ve met him and I have friends who know him, but I can’t say I know the man. He’s been in the news lately, but for all the wrong reasons. When CBS News’ magazine “60 Minutes” ran a story last Sunday about members of Congress who were involved in insider trading, Bachus was prominently mentioned. It appears that Bachus was taking secret information he was getting as a member of the House Committee on Financial Services and using that to trade banking stocks that he knew were about to go down in value.

Bachus says that nothing he did was illegal, but he also says he quit trading stocks late last year. I wonder why he quit doing what he was doing if it was perfectly legal and ethical.

Here in Alabama, many conservatives and Republicans are outraged about Bachus’ behavior and are calling on him to resign. About 50 or 6o conservatives gathered at Bachus’ Birmingham office Thursday to protest.

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