Wine Futures Problem

This is fairly common and a reason why many merchants won't even sell futures. Often they are also the victims and then they get to take the blame from customers, too. One wine merchant I know had this happen. He did get a refund, but that was little consolation to him or his customers considering they were without the use of their money for a long period of time *and* didn't get the wine.

Dimitri

I don't understand your message. Bordeaux may be expensive, but it isn't rare. If the merchant doesn't get delivery, he must go to the market and purchase wine to make his customer whole. What is the problem?

The problem is that the market price may be radically different from the futures price.

Dimitri

Not too many years ago, someone in Michigan sold a huge number of futures to retailers, who in turn sold many to customers(retailers can hold futures also, if they wish).

None of the wine was delivered. It is my understanding that making good on these futures almost destroyed Calvert-Woodley in DC.

If all you are buying is the guarantee from the third party, I think you have to sue the third party.

It is possible that Mr Silver does not have the funds to make good on these futures, if he got stiffed.

I think R Gordon indicated that he saw them advertising his wine. Therefore it is likley that if that is the case, and R Gordon is not full of shit, that the retailer is a crook.

All this is opinion.

Also, he does not have to engage an attorney to sue. Just contact the State Attorney General office in Albany. I promise if this is accurate it would be fraud and the state will make them criminally liable. If he stiffed one person he likely stiffed others. If that statement is true 3 separate acts might get RICO statute. I bet the retailer would fullfill their obligations quickly.

He does not necessarily see "his" wine, he sees the same wine, which Silver may have been procured from a different source. R. Gordon did not buy wine, he purchased paper with the promise of wine from someone, though Silver.

I promise(your word) you that this has happened many times, and The AG has not done anything. I am not an attorney, but buying a title to the brooklyn bridge through a third party with no delivery does not make for a good law suit. Buying Lafite from Brand X from Silver gives you a law suite on Brand X when they do not deliver.

Most retailers make good. I have had only one instance where the us maker of the futures defaulted, and the retailer made good. The maker is a "repudable" distributer in the us, and still in business. I assume he somehow made good at a later date, when he could afford to.

California Futures from MacArthur Beverages are a pretty safe bet. Otherwise, if it is too good to be true, it is too good.

If you want to sue a few, I have a few for you.

I think you are mistaken and if there is a fraud, then the retailer sold the paper. Non of the futures are direct from the foreign winemaker. Therefore the risk is with the retailer.

If he folds then you have no options. But if open he assumes risk.

I had a situation with the 1995 futures on Chateau Margaux from a place in Long Island. When the ship sunk bringing in the wine they were obligated by my contract with them...not Chateau Margaux. And in that case they could have invoked a special clause that "gods act" but they did not.

They offered my money back at the new level or exchange in mdse to other wines when they were short. They were reputable.

In this case he saw the same wine...regardless of price it damn near could be securities fraud. This could be interesting should he take his case further. Dealing with BTA and AG would not be very nice. If this happened to me I would go to the AG and present the case of fraud.

I have never been burned in 24 years of buying futures. Never. Deal with reputable places. The only way I am out is if the retailer goes out of business. Anything short of that is fraud. My opinion only.

dick

One can sue all parties, the retailer, the importer.....however why not use Attorney General if fraud was committed. You may not get your money but you get rid of crooks in the business.

Also, each contract is different but I reviewed Zachys, Winewatch, Popswine...if they can't deliver I think if reputable you would get your money back.

All purchases are a risk...but any fraud needs to be prosecuted.

If a retailer does not refund money in full or provide a mutually agreed upon settlement and/or substibute...then Attorney General for Fraud. Put the bastard out of business.

the end.

my opinion only.

Thank you. I appreciate your well reasoned input. I am going to call the A.G. office Monday. Can't hurt!

I don't understand D. Gerasimatos who seems to think that the retailer bears no risk in this transaction. Perhaps he lives in a country where some different law applies.

Yes, that describes you pretty well. Clueless about how futures work, too.

Dimitri

Not to mention that it's hard to recover damages from a bankrupt party.

Dimitri

The futures are issued by a third party, not from the retailer. In the best case scenario you will indeed get your money back (as I said) but that doesn't help you get your wine. There is no obligation for the retailer to provide you wine if the contract writer of the future falls through. Only the largest retailers contract directly with the wineries.

Dimitri

You can't make this true by repeating it. I did not buy futures THROUGH a retailer, I bought them FROM a retailer. My contract is with the retailer. Whether he made an offsetting contract is up to him. If he is bankrupt, I am indeed forked. Otherwise, he has a contract to deliver the wine. Period. If you have basis in law for your position, I would be very interested.

That part I agree. If he is bankrupt you get nothing. However if not bankrupt and he sells product he should be liable to return either the money or the fair market value at the time to futures are due.

Retailers do often play the market to make money as a hedge or market profits. They cannot simply ignore the transaction and keep the money.

In my opinion that is fraud. It could also come under a form of securities fraud. Depends upon how determined an Attorney General wants to be.

What does your contract say exactly? Why don't you post what it says and what exclusions, if any, apply? Perhaps your retailer did not protect himself, but it seems unlikely.

Dimitri

My point here all along is that getting your money back does you no good if what you really wanted was the wine. You've given your money over to someone for a year and at the end of the year they give it back to you.

Dimitri

I agree. Futures can be risky but the contract is due, goods must be delivered. Bankruptcy voids all protections like usual. Caveat Emptor.

Not true. Let me read to you from the futures contract of The Wine House, a very large and reputable seller here in LA:

"Quantities are limited. If we cannot fill your order, your payment will be promptly refunded to you or we will attempt to find the same wine at market price, which will probably be at a higher price."

You *may* have the choice (wording is "or") of getting a refund or buying at market price if they cannot fill your futures order. Good do not have to be delivered under the terms of this futures contract. Wording like this is common.

Dimitri

Even if goods do not have to be delivered it does not state they would not have to refund...and market price refund would be the norm.

At least that was my personal experience with another retailer on Long Island years ago.

Guess it depends on how service oriented they are.