WASHINGTON — The White House has portrayed the commodities market trading that netted First Lady Hillary Rodham Clinton almost $100,000 in a two-year period as a case of an ordinary small investor who took her chances and came up a winner with shrewd judgment and a little guidance from an experienced friend.
But experts and officials in the volatile futures trading industry said Wednesday that what she did would be highly unusual for the average small investor to pull off successfully. And many commodities trading firms would never have allowed such an investor to try it.
For one thing, the experts said, her activities involved exposure to possible losses in the unpredictable market for farm commodities futures that substantially exceeded the available capital--losses that potentially could have been greater than her family's net worth if the market had turned sharply against her.
Normally, commodities specialists said, an inexperienced investor with such limited assets would not be allowed to run the risks Mrs. Clinton did unless she had the backing of--and perhaps financial guarantees from--a wealthy backer.
At the time she made her huge profits, starting with an initial capital investment of just $1,000, Bill Clinton was a rising political star in Arkansas but he and his wife had only modest assets. They did not even own their own home.
Yet Mrs. Clinton took surprisingly large positions in cattle futures, earning one-day profits as high as $30,000. Had the market moved the other way, she could have lost huge amounts virtually overnight, according to market specialists.
The White House has insisted that Mrs. Clinton risked her own money, made all decisions herself about when to buy and sell and bore full responsibility for any losses. They have said that she got advice from prominent Arkansas lawyer James B. Blair, but also consulted other advisers and studied the market through the Wall Street Journal.
Futures market analysts and officials who have examined the records of her activities, however, question whether a responsible broker would have allowed her to trade the way she did without some kind of financial protection.
One commodity trader with 30 years' experience who reviewed the records of Mrs. Clinton's market activity said that her account is highly unusual, both in the frequency and size of trades and in the small amount of capital behind them.
"There's no way in the world that Hillary Clinton should have been trading 50 (cattle futures) contracts. That's 2 million pounds of beef. The risk posture is just not consistent with (the Clintons') income and net worth," said this trader, who works for one of the nation's biggest brokerage houses.
"We would not let either one of them (the Clintons) trade commodities. In the late 1970s, we required a couple hundred thousand dollars in liquid net worth before we let them in the door to trade commodities. This is not for the faint of heart," the broker said.
Another commodities trader, Phil Tiger of Smith Barney Shearson, described the First Lady's successful trading as "unusual and fortuitous, and her timing was perfect."
He said that she entered the market just at a point of rocketing growth and rode it until she had made a small fortune.
"It surprised me she stuck it out as long as she did. Most novices just take their profits and get out," Tiger said.
But other market experts noted that shortly after Mrs. Clinton ceased trading, her broker, Robert L. (Red) Bone, and the brokerage company, Ray E. Friedman & Co., were disciplined by the Chicago Mercantile Exchange for "serious and repeated" violations of exchange rules on margin requirements and record-keeping functions at their Springdale, Ark., office.
Margin is the amount of cash a trader must put up versus the amount of borrowed money used to make the investment.
Bone was suspended from trading for three years. The brokerage was fined $250,000.
White House officials have said that Mrs. Clinton was unaware of allegations that her brokerage was allocating successful trades to clients or that Bone had previously been suspended for trading violations.
Elliot Bercovitz, vice president for strategic planning at Lind-Waldock Inc., of Chicago, one of the nation's leading commodities trading firms, said that it was possible at the time to turn a small stake into $100,000 with savvy trading in the booming market in cattle futures.
But one transaction caught his and a number of other brokers' attention: the very first trade in October, 1978, when her account balance went from her initial $1,000 investment to $6,300 in one day.
There is no documentation for what was traded at what price, but some brokers said that she could not possibly have had enough in her account to cover the large position in cattle futures that she would have had to take to make that much profit that quickly.