The Last 7 Days of MF Global: How It Really Went Down

Cast of main characters:
Jon Corzine, CEO of MF Global Holdings

Henri Steenkamp, CFO of MF Global Holdings

Edith O'Brien, assistant treasurer of MF Global, the broker-dealer subsidiary of MF Global Holdings

Laurie Ferber, general counsel for MF Global Holdings

T minus seven days: Monday, Oct. 24, 2011
Following a meeting with MF Global (OTC: MFGLQ) management the previous Friday, Moody's (NYSE: MCO  ) downgrades the broker to Baa3 -- the lowest investment-grade rating. Worse still, Moody's places MF Global on review for a possible further downgrade. Moody's announcement has lit a fuse; Corzine and his cadre of executives are now in crisis-management mode. They urgently need to shore up confidence if they are to avert a collapse.

Richard Repetto, a brokerage industry analyst at Sandler O'Neill & Partners, suggests that Jon Corzine may be the only thing keeping the firm together, telling Bloomberg: "If he's gone, forget about it. Customers flee and it's even worse."

In response to the downgrade, MF Global moves its earnings announcement to the following morning -- two days earlier than planned. In order to try to reassure clients and stave off defections, the firm sends clients a letter signed by CFO Henri Steenkamp. Admitting it is "disappointed" by the downgrade, MF Global nonetheless tries to put a brave face on things: "We believe it bears no implications for our clients or the strategic direction of MF Global." In a precursor to the now-infamous statement Steenkamp makes during the next day's earnings call, the letter goes on to state that "MF Global's financial position is strong; the firm remains a well-capitalized counterparty with a strong liquidity position."

One of the factors that drove the decision to downgrade: In the Friday meeting, Moody's learns that MF Global's European sovereign debt positions are the firm's own bets -- there are no clients behind them. Moody's isn't alone in its concern; as Macquarie Group analyst Ed Ditmire tells Bloomberg, "This European sovereign exposure has cut [the] support [the company's book value provides to the stock price]; it makes people think that book value isn't as certain as they thought."

The bond market is equally concerned. A $325 million MF Global bond issue with a 6.25% coupon, maturing in August 2016, closes at just $0.638 on the dollar. At that price, the bonds are yielding 17.8%, or nearly 17 percentage points over the yield on same-maturity Treasuries. Per bond-market convention, MF Global's bonds are now "distressed" (a label given to bonds offering a spread of at least ten points over Treasuries). Diana DeSocio, a spokeswoman for MF Global, says the firm has a policy of not commenting on its bond prices.

T minus six days: Tuesday, Oct. 25
In a morning conference call with analysts and investors, MF Global announces a wider-than-expected loss for its fiscal second quarter ending Sept. 30. Although they did not contribute to the loss, Corzine addresses the European sovereign debt trades head-on in his opening remarks: "Our positions and the judgment about risk mitigation steps are my personal responsibility and a prime focus of my attention." Despite this, analysts will pepper him with questions on the trades during the question-and-answer session.

Not to be outdone, CFO Henri Steenkamp tells investors he is "proud to say that our capital structure has never been stronger."

The stock market isn't buying it. In fact, investors sell the stock mercilessly, sending the price down 48% to close under $2.

T minus five days: Wednesday, Oct. 26
At 11:12 a.m., Bloomberg reports that mergers and acquisitions advisor Evercore Partners is working with MF Global. According to an unnamed source, the broker is "exploring strategic options," including selling itself. DeSocio refuses to comment on "rumors or speculation." In fact, MF Global had begun discussions with Evercore the previous day regarding a partial or complete sale but waited until Wednesday evening to formally retain the advisor's services.

"It appears that there's been a dramatic loss of investor confidence," Repetto tells The New York Times. "This is Corzine's legacy ... he needs to step in and reinvigorate the business and reassure investors and clients."

Five-year bonds issued by MF Global in August fall as low as $0.45 on the dollar intraday but recover and trade up to $0.67 late in the day. Still, the cost of insuring against a default by the broker has exploded: To insure $10 million in face amount of bonds for five years, the up-front payment is $4.7 million, with annual payments of $500,000.

T minus four days: Thursday, Oct. 27
At 2 p.m., MF Global management and members of the finance team meet with representatives of the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission in the broker's New York headquarters. The order of the day is MF Global's funding and its liquidity. When the meeting concludes, a smaller group of MF Global personnel from the legal, compliance, and finance functions meet with the SEC to discuss the examination that is to take place the following week.

During market hours, Fitch Ratings becomes the first major rating agency to cut MF Global's credit rating to "junk" status.

At 3:41 p.m., The New York Times reports that, as of Thursday afternoon, the percentage of client assets that have left the firm remains in the low single digits. The same sources indicate that the firm's liquidity is adequate and that it is not considering filing for bankruptcy.

That same afternoon, CME representatives arrive at the firm's Chicago office to perform an audit of the firm's daily segregation report as of the close of the previous business day (Wednesday, Oct. 26).

Late on Thursday, Moody's downgrades MF Global for the second time in four days. MF Global is now a "junk" issuer according to two of the "big three" credit rating agencies.

T minus three days: Friday, Oct. 28
MF Global is preparing to auction off $4.9 billion in government, agency, and corporate bonds in order to "get liquid." JPMorgan Chase (NYSE: JPM  ) is facilitating this process and, in order to address MF Global's urgent need for cash, has agreed to provide any funds from the sales to MF Global on a same-day basis. (Such trades typically take one or two days to settle.) However, the bank will only do so if the broker fills overdrafts in clearing accounts MF Global's U.K. affiliates maintain with JPMorgan.

This issue is raised directly with Jon Corzine on Friday morning. Corzine personally assures JPMorgan that MF Global can and will cover the overdrafts promptly. According to his own testimony, Corzine "contacted the firm's back office in Chicago and others and asked them to resolve this issue, which I understood they did."

In order to address the problem, assistant treasurer Edith O'Brien performs two transfers that morning: a $200 million transfer from a customer segregated-funds account to an MF Global "house" account within the broker-dealer (MF Global), followed by a $175 million transfer from said house account to an MF Global U.K. account at JPMorgan.

In an email, assistant treasurer O'Brien indicates that the first transfer was made "per JC's [Jon Corzine's] direct instructions." This is not the smoking gun the press has made it out to be. In Congressional testimony last December, Corzine stated: "I never gave any instruction to misuse customer funds."

In a statement in March, Corzine spokesman Steven Goldberg was even more specific: "He never directed Ms. O'Brien or anyone else regarding which account should be used to cure the overdrafts, and he never directed that customer funds should be used for that purpose. Nor was he informed that customer funds had been used for that purpose." It is entirely conceivable that Corzine's "direct instructions" were limited to the necessity of filling the overdraft.

Mr. Corzine also testified that he received "assurance ... from our back-office people in Chicago" -- including O'Brien -- that the transfer was legitimate. According to The Wall Street Journal, O'Brien disputes having given any such assurance.

It's important to note here that the idea that there is never any comingling of client and house funds is inaccurate; in fact, it's commonplace for a broker to add some of its own funds to client accounts as a form of working capital. As such, it isn't illegal for a broker to draw funds from client accounts as required by the business -- provided it is not withdrawing more than the amount it has previously contributed to the account. The crucial question is, therefore, to what extent had MF Global withdrawn funds from its customer accounts? That's not just a postmortem question; on that Friday morning, JPMorgan became intensely interested in the answer.

Indeed, by 11 a.m., JPMorgan had confirmed that MF Global had covered the overdrafts. However, due to the depth of the operational ties between the two firms, they could "see" the initial $200 million transfer originating from a customer account. Given the circumstances of MF Global's distress, the bankers naturally thought it prudent to confirm that this transfer complied with CFTC rules regarding customer segregated accounts (i.e., that the funds belonged to MF Global).

At some point in the early to mid afternoon, JPMorgan's chief risk officer, Barry Zubrow, broaches the matter directly with Jon Corzine during a phone call and requests written assurances. (Zubrow is a former Goldman Sachs (NYSE: GS  ) partner and a former advisor to Corzine when he was governor of New Jersey.) The fact that the bank chose to speak to Corzine underscores the level of its concern regarding this matter. Corzine tells Zubrow that he understands the request and will ask someone under him to review it.

JPMorgan then emails Jon Corzine a compliance letter requiring O'Brien to attest that the transfers made from customer segregated accounts were compliant with all applicable rules concerning segregation, which he then asks MF Global general counsel Laurie Ferber to review. The scope of the letter is very broad, covering all transfers from MF Global past and future. Ferber demurs on the grounds that no single employee can offer such a guarantee without having personally overseen every such past transfer -- to say nothing of the open-ended liability linked to guarantees regarding future actions.

Ferber contacts a counterpart at JPMorgan to try and gain a better understanding of its requirements. Naturally, JPMorgan's overriding concern is with the two transactions that occurred that morning. Ferber voices her objections to the language in the initial certificate; her counterpart indicates JPMorgan is prepared to narrow it down. Ferber then calls O'Brien to update her on the conversation she's just had. When Ferber hangs up, she's under the impression that O'Brien is ready to sign the letter if it refers only to the two transactions in question.

At this stage, either there was an internal miscommunication at JPMorgan or there is a discrepancy between the testimonies of Ferber and Diane Genova, the deputy general counsel of JPMorgan Chase's investment bank. According to the latter, the bank becomes impatient that it has not received the signed letter and contacts Ferber's office. Ferber is unavailable, so the bank speaks to her deputy, Dennis Klejna, instead.

Lucky for them, Klejna -- a former head of the enforcement division of the CFTC -- understands the issue well. According to Genova's testimony, Klejna verbally assures them that the initial transfer out of the customer segregated account was compliant with CFTC rules and represented excess funds belonging to MF Global. This is contradicted by a Wall Street Journal source, according to whom Klejna disagrees that he made such representations, because he was not in any position to do so.

However, there is no reason to doubt Genova's testimony that Klejna expressed the same reservations as Ferber and requested a revised letter that focuses strictly on transfers made that day. According to Genova, at approximately 6:30 p.m. JPMorgan emails Klejna a revised letter "focusing only, as Mr. Klejna had suggested, on the transfers from October 28." On this point, Genova's testimony is again inconsistent with Ferber's (if we discard the possibility that several parties at JPMorgan were working independently on two sets of drafts without the knowledge of the other parties).

Indeed, Ferber told Congress she received a second draft of the letter from JPMorgan that evening. Unfortunately, the language remained too broad for her liking: Instead of focusing on the two transactions they had discussed, JPMorgan's revised draft refers to (emphasis mine), "all transfers or withdrawals made on or after October 28." Because Ferber provided verbatim quotes from the second and third drafts of the letter, I favor her recollection of events over Genova's.

T minus two days: Saturday, Oct. 29
At about 2:30 p.m., Ferber and Klejna speak with lawyers from JPMorgan concerning the letter, informing them that the second draft remains too broad. She reiterates that the funds withdrawn from the customer segregated account were MF Global's and tells JPMorgan's lawyers she thinks she can get them a signed letter if they restrict it to the two transactions that occurred on Friday.

Genova herself testified that part of this conversation was "about how we could more specifically focus the draft letter on the series of transfers on the morning of Friday, October 28 that had initially triggered J.P. Morgan's request for assurances from MF Global" -- which casts a doubt on her characterization of the draft sent to Klejna the previous day.

A little after 5 p.m., JPMorgan sends a third, and final, draft to Ferber and Klejna (who was also interacting with O'Brien). The final draft refers to "the transfer and withdrawal made on October 28, 2011 in the amount of $200,000,000 ... out of such Customer Segregated Account to a proprietary account of MF Global and the subsequent transfer to the MF Global UK Ltd. Account ... for the purpose of covering overdraft amounts in accounts with J.P. Morgan." You can read the full letter draft here (link opens PDF file).

Ferber considers the language satisfactory, but unfortunately she doesn't follow up after this point, perhaps considering that Klejna has the matter in hand and likely feeling overwhelmed by numerous other items requiring her attention. Edith O'Brien never signs the letter.

At 5:30 p.m., Corzine provides regulators with an update on the firm's asset sale program and negotiations to sell the entire firm. He identifies JPMorgan Chase and Interactive Brokers as the most interested potential acquirers.

T minus one day: Sunday, Oct. 30
At 4 a.m., Ferber informs a member of the CFTC that, beginning at 7:30 a.m. that morning, MF Global will auction off most of the securities remaining on its balance sheet, including the infamous European sovereign repo-to-maturity positions, in order to free up as much cash as possible.

In the afternoon, a member of MF Global's finance team in Chicago sends out an email, according to which the daily summary of the segregated customer account for Friday shows a $952 million deficit. The operating assumption at this stage is that the figure is the result of an accounting error. Members of the finance team, regulators (some of whom are now on site in Chicago), and, ultimately, even a team from prospective acquirer Interactive Brokers work feverishly through the afternoon and the evening to try to resolve the "error."

Monday, Oct. 31: MF Global files for bankruptcy
Between 12 a.m. and 1 a.m., O'Brien hands Christine Serwinski, CFO of MF Global North America, a document that traces the deficit to three types of transactions:

  1. Intraday loans between MF Global's futures commission merchant (the futures brokerage) and its broker-dealer
  2. The funding of outgoing broker-dealer client funds
  3. A $175 million transfer to MF Global's London office on Oct. 28

All told, the transactions add up to $900 million. Serwinski immediately understands that the deficit is genuine and no accounting error.

At 1 a.m., O'Brien and Serwinski tell the CME Group (NYSE: CME  ) there is a genuine deficit in segregated customer funds.

At 2 a.m. a mammoth conference call begins that will run until about 6:30 a.m. On the call are MF Global's senior management, including Ferber and Steenkamp; its board (on and off); its outside counsel; and an alphabet soup of regulators -- the SEC, the CFTC, the CME, the FSA (a U.K. regulator), and the Federal Reserve Bank of New York. MF Global has the painful task of informing its overlords that it is unable to resolve the deficit, dooming the possibility of a last-minute sale.

At 10:24 a.m., MF Global Holdings' counsel files a petition for protection under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York.

Postscript
On April 24, 2012, James Giddens, the trustee overseeing the liquidation of MF Global, told the Senate Banking Committee his team's investigation into the whereabouts of $1.6 billion in missing customer funds was "substantially concluded," and he went on to say that "we can trace where the cash and securities in the firm went, and that we've done." Of the $1.6 billion, roughly $680 million was transferred to financial institutions with which MF Global did business -- including JPMorgan, which had received a large part of the funds. Giddens also said his team had "a solid basis for seeking the recovery of some of the funds that were transferred to JPMorgan," and that he is engaged in discussions with the bank regarding the matter.

In their testimony before Congress on March 28, Ferber, Serwinski, and Steenkamp all said they were cooperating with federal authorities' investigations. At the same hearing, O'Brien invoked her right not to testify under the Fifth Amendment. However, The Wall Street Journal has reported that her lawyers offered a "proffer" – the first step in negotiating immunity or leniency in exchange for cooperating with federal investigators.

In my opinion, O'Brien is instrumental in this story, but I see no evidence that Corzine was complicit in, let alone responsible for, the illegal transfer of customer funds. My prediction: Corzine will never be charged or prosecuted by the government in connection with these transfers -- and not because of any conspiracy to protect him.

However, that does not mean he is entirely safe from litigation; in a statement, Giddens said he could pursue claims for "among other things, breach of fiduciary duties owed to both [the MF Global brokerage] and its customers, and violations of the segregation requirements of the Commodity Exchange Act." A spokesperson for Giddens later added that the list of targets could include any officer or director of the company.

Fool contributor Alex Dumortier holds no position in any company mentioned. Click here to see his holdings and a short bio. You can follow him on Twitter. The Motley Fool owns shares of CME Group and JPMorgan Chase. Motley Fool newsletter services have recommended buying shares of Interactive Brokers Group, Moody's, and The Goldman Sachs Group. The Motley Fool has a disclosure policy.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (22) | Recommend This Article (26)

Comments from our Foolish Readers

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  • Report this Comment On May 10, 2012, at 1:44 PM, AndrewXnn wrote:

    How could anybody authorize $200 million transfers and not know where it came from?

    That they claimed every thing was fine financially while they were basically bankrupt means there were many liars. Those with higher levels of authority carry greater responsibility for knowing the status.

  • Report this Comment On May 10, 2012, at 2:24 PM, TMFAleph1 wrote:

    @AndrewXnn

    During the firm's final week of operations, cash and securities transferred in and out of MF Global totaled over $200 billion.

  • Report this Comment On May 10, 2012, at 3:18 PM, TMFCheesehead wrote:

    Awesome, exhaustive work Alex. An absolutely necessary read to understand how something like this goes down.

    Brian Stoffel

  • Report this Comment On May 10, 2012, at 3:19 PM, TMFAleph1 wrote:

    Thanks, Brian!

  • Report this Comment On May 10, 2012, at 4:09 PM, Teacherman1 wrote:

    Another interesting and informative article.

    Thanks for the insight Alex.

  • Report this Comment On May 10, 2012, at 4:11 PM, TMFMorgan wrote:

    Nice work Alex! great stuff.

  • Report this Comment On May 10, 2012, at 7:10 PM, nickjob wrote:

    When u say u see no evidence, is that because u can't tell who is lying? Since the case rests with O'Brien, why wouldn't the JD (Holder) give immunity? Why hasn't the JD interviewed Corzine? Is it possible that JD already knows what O'Brien knows and won't give immunity because they don't want to hear it? And is that because Corzine continues to give Obama hundreds of thousands of campaign contributions when Holder was appointed by and works for Obama? Have u thought about the impropriety that exists between Gensler and Corzine wherein Gensler relaxed customer seg rules for Corzine's benefit without their being an open forum for public discussion as required by the CFTC for any major changes in commodity law? Do u know why the CFTC pushed the bankruptcy to the SEC when the vast majority of accounts were under CFTC jurisdiction? We are all led to believe Corzine is one of the smartest guys on the planet yet, when he says he doesn't know if the money was customer money and where it went, are we supposed to believe him? Was he smart enough to wire the money to London to avoid US bankruptcy laws but we are led to believe he was too dumb to understand his back office procedures? alex, u should not have given an opinion because u don't have near enough facts!

  • Report this Comment On May 10, 2012, at 7:34 PM, ahsbls wrote:

    You forgot to mention that checks were written to customers that bounced even though customers asked for a wire transfer -- on the same day that the checks were sent to customers, money was wire transferred to the banks. 1.6 billion dollars of customer money was stolen out of customer segregated accounts -- that is a crime and the responsible parties need to be held accountable. Eric Holder needs to appoint an independent counsel to investigate this 1.6 billion dollar theft of customer money in order to avoid any conflicts of interests or favoritism to Jon Corzine because of his political connections.

  • Report this Comment On May 10, 2012, at 9:12 PM, ynotc wrote:

    "Mr. Corzine also testified that he received "assurance ... from our back-office people in Chicago" -- including O'Brien -- that the transfer was legitimate"

    Why would you need to make assurances that somethig is legitimate unless you know that it isn't or if your firm has not acted properly in the past.

    Corzine new something which is why he had to "swear on a stack of bibles" that this was a legitimate transfer.

    You are right about Corzine skating though. Members of the Goldman Sachs cabal and political types almost are never held to account for anything they do

  • Report this Comment On May 10, 2012, at 11:17 PM, nickjob wrote:

    Alex, Corzine is a crook and the sheriff and posse are on his side. U put together a lot of facts but if u overlook the obvious improprieties along the way, I've got a bridge to sell you!And we haven't even mentioned Jamie Dimon and his role. He has the stolen money that he won't give back to the farmers. U ought to bone up a little more before u give an opinion.

  • Report this Comment On May 11, 2012, at 12:12 AM, kabrink wrote:

    Corzine is a major crook but being protected by his crooked buddies from the Chicago crime circle that currently occupies the White House.

  • Report this Comment On May 11, 2012, at 12:56 AM, TMFKopp wrote:

    Great work Alex!

    If you were wishing that your fact-based exploration included more in the way of politically-motivated conspiracy theories, it seems you've been offered plenty of fodder.

    Once again, nice job.

    Matt

  • Report this Comment On May 11, 2012, at 5:06 AM, Stonewashed wrote:

    "In a statement in March, Corzine spokesman Steven Goldberg was even more specific: "He never directed Ms. O'Brien or anyone else regarding which account should be used to cure the overdrafts, and he never directed that customer funds should be used for that purpose. Nor was he informed that customer funds had been used for that purpose." It is entirely conceivable that Corzine's "direct instructions" were limited to the necessity of filling the overdraft"

    This is a classic description of a couple of wise guys who go to their underlings and say, "do what ya gotta do" (wink, wink), with the underlings stupidly believing the godfather is smart enough to cover their tracks.

    And what does this say about those who think this is a plausible and excusable explanation with no further need to delve into this with any further questions?

    You write

    "I see no evidence that Corzine was complicit in, let alone responsible for, the illegal transfer of customer funds. My prediction: Corzine will never be charged or prosecuted by the government in connection with these transfers -- and not because of any conspiracy to protect him"

    So all the lying MF Global did after the downgrade was just something "boys" have to do? Or they were just victims of malicious "others" who did not appreciate their business model and they lied to protect their beloved shareholders?

    "JPMorgan had confirmed that MF Global had covered the overdrafts. However, due to the depth of the operational ties between the two firms, they could "see" the initial $200 million transfer originating from a customer account. Given the circumstances of MF Global's distress, the bankers naturally thought it prudent to confirm that this transfer complied with CFTC rules regarding customer segregated accounts (i.e., that the funds belonged to MF Global)."

    So what we have here is one wise guy knowing the other wise guy has lost control of the ship and can clearly "see" where the money is coming from. Despite knowing that, they want a letter from the other wise guy saying it wasn't what they could clearly see, who in turn tells others "to take care of it".

    Meanwhile, we gloss over that if JP Morgan too is complicent in this second degree murder of funds, their shareholders might have to give the money back.

  • Report this Comment On May 11, 2012, at 10:24 AM, PianoguyScott wrote:

    As one small investor still owed over $100,000 from this fiasco, this is more than a story - it's real life. Due to many of my commodity trades taking place in foreign denominated currencies I have had less than 50% of my funds returned going on 7 months now. I am and always was totally prepared for trading risk. I was not nor am I now ever going to be OK with having my customer segregated funds stolen. Talk about a black swan event ...

    This is nothing different than going down to your local bank where you thought your funds were being held in an account FOR YOU - going to make a withdrawal, and finding out that the bank's executive team took your money to pay off their bad debts to another company. There is a huge difference between that and owning the same banks stock, where in that case you understand that your ownership gives the firm's executives the right to, in effect, make decisions with your capital that might end up in losing it to bankruptcy.

    This wasn't Corzine and other's funds to make decisions about - it was MY money in MY customer segregated account that I felt with the oversight of the CFTC and other's was safe from commingling.

    JPMorgan has millions from those last minute transfers that caused the checks MFGlobal cut to customers in lieu of wire transfers bounce. The fact they are not being brought to task to return those funds to the rightful owners by our federal regulators blows my mind.

    It's no politically-motivated conspiracy theory. It's plainly the right thing to do, and our Justice Department is TOTALLY ignoring the entire issue. Call them and ask about this if you don't believe me...

    WTF does the term "customer segregated funds" mean? It means those funds are ours - the customers - not the firm's to decide who gets paid in the last minute.

    JPMorgan and MFGLobal's bankruptcy trustee can fight over what is left AFTER the customer seg. funds get paid back 100 cents on the dollar.

    My rant is so passionate because it is so infuriating to keep hearing the insinuations in articles and the media that all these missing funds are somehow only affecting the insiders and huge financial players, and that they should be aware of the risks, and that somehow the "big boys" will figure this out.

    That's not it. Those of us torched by this are thousands of small farmers who now don't have enough $$ to plant this year, and small traders like me who, again, by all rights expect the equivalent of what any of you would expect if you went to your bank account and found your funds had been removed improperly by the bank.

    You'd expect the regulators (in that case the FDIC) to make you whole and prosecute anyone who acted criminally or fiducially negligent.

    I'll step off my soap box now ...

  • Report this Comment On May 11, 2012, at 12:52 PM, nickjob wrote:

    To pianoGuyScott: Thanks for your eloquent help in expressing the anxiety we feel in getting financially raped while the authorities who are oathbound to protect us ( CFTC,SEC,JD,etc)haven't done jack! Maybe the media does not understand because they have no skin in the game.

    What the media doesn't seem to understand, and you hit on it, is that OUR money in customer segregation, should be perceived as a lock box and that NOBODY has the right to take that money out of our box and use it for other purposes. That was the intent of customer segregation in the first place. If the media wants to explore the heart of the matter, they ought to consider the true insidiousness of the private contacts Corzine had with Gensler (another good old boy) to change those longstanding bonds. If 100 year old rules are changed, they should first be opened for public debate, not by two crooks in some sleazy smoke filled room. Ironically, the media hasn't done squat about Gensler's role in this mess. He has been given a pass in spite of helping Corzine secretly relax cust. seg rules as well as punting the bankruptcy to the SEC. What a guy!

    Alex, if you want to do something really constructive about MF Global, I suggest you start by doing what nobody else has done so far; delve into Gensler's integrity regarding these issues!

    We are not talking about conspiracy here. We are talking about honesty, integrity and TRUTH.

  • Report this Comment On May 11, 2012, at 1:23 PM, nickjob wrote:

    Gensler recused himself because he smelled the stench! He knows in his heart something went seriously wrong which affected thousands of innocent people. He is like the doctor who finds out after surgery he cut off the wrong leg and says, "oops! I have to go on vacation now." The shame is that the media fell for his "recusal" and let him off the hook of responsibility.

  • Report this Comment On May 12, 2012, at 12:43 AM, awallejr wrote:

    "alex, u should not have given an opinion because u don't have near enough facts!"

    Alex often confuses the term "fact" with "opinion." We have been down this road elsewhere:

    http://caps.fool.com/Blogs/why-isnt-jon-corzine-in/722155

    You see in that thread Alex became angry because I had the audacity to dispute his reasoning. Alex believes that whatever Corzine says is the truth and whatever O'Brien says is a lie.

  • Report this Comment On May 14, 2012, at 9:48 PM, ProfEmeritus wrote:

    Don Corzine and Consigliere O'Brien understand the true value of Omerta. The farce of JP Morgan and the "letter" are reminiscent of "dangerous liaisons". Morgan clearly knew it was client money, and MF Global's obvious stall on signing the letter only made it even more clear. This was clearly a make or break moment for the firm so the ridiculous comment follows:"but unfortunately she doesn't follow up after this point, perhaps considering that Klejna has the matter in hand and likely feeling overwhelmed by numerous other items requiring her attention. Edith O'Brien never signs the letter." No lawyer with the slightest concern for truth lets this issue slide. She has given Morgan her own word on the matter. So Ferber is in on the fakery and theft with all the others. Morgan get the money to England where the laws on robbery by banks have always favored the banks. The money is covered with blood and was handed over in the dark alley but no one actually told them it was stolen so they get to keep it.

  • Report this Comment On May 14, 2012, at 10:25 PM, awallejr wrote:

    Except Don Corzine is trying to stick it to O'Brien in hopes of arguing "reasonable doubt" while JPM stands on the sidelines having received their money "knowing" where it really came from (hence the carte blanche letter requested).

    The REAL fact, 1.6 BILLION dollars was STOLEN. And if the SEC, Justice Dept. or CFTC lets this slide, then SHAME on them. They are taking paychecks which equats to theft from the taxpayer.

  • Report this Comment On May 18, 2012, at 1:09 PM, whyaduck1128 wrote:

    The true story is that a lot of the old boys' network got caught stealing this time, and Alex among many is reluctant to place the blame on those to whom it ultimately belongs. Those in our so-called government, which sucks at the teats of these well-connected thieves for campaign funds and post-government jobs, want no part of a real investigation lest their future big bucks be jeopardized.

    Corzine and his cronies are going to skate, just like the big players almost always do, because no one in a position to do anything wants the truth to be known or anyone to be punished. The little guys will bear the brunt of the loss; in the words of the late great Richard Pryor, "You go down there looking for justice, that's who you'll find--just us."

  • Report this Comment On May 18, 2012, at 1:15 PM, Excusemesir wrote:

    From the beginning of the postscript I quote:

    On April 24, 2012, James Giddens, the trustee overseeing the liquidation of MF Global, told the Senate Banking Committee his team's investigation into the whereabouts of $1.6 billion in missing customer funds was "substantially concluded," and he went on to say that "we can trace where the cash and securities in the firm went, and that we've done." Of the $1.6 billion, roughly $680 million was transferred to financial institutions with which MF Global did business -- including JPMorgan, which had received a large part of the funds.

    End quote

    So, the big question in my mind is, "Where did the other $920 million go?" Or more to the point, where is it now?

  • Report this Comment On May 23, 2012, at 2:56 PM, thidmark wrote:

    A few thoughts:

    --We keep adding thousands and thousands of pages of regulations and this crap keeps happening.

    --The Holder Justice Department will get to the bottom of this ... right after they sue another southern state.

    --Until the election is over, you'll have an easier time finding bin Laden in the Indian Ocean than spotting Corzine anywhere.

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