MF Global declares bankruptcy, $100s of millions missing

[Winehole23]

Federal regulators have discovered that hundreds of millions of dollars in customer money has gone missing from MF Global in recent days, prompting an investigation into the brokerage firm, which is run by Jon S. Corzine, the former New Jersey governor, several people briefed on the matter said on Monday.


The recognition that money was missing scuttled at the 11th hour an agreement to sell a major part of MF Global to a rival brokerage firm. MF Global had staked its survival on completing the deal. Instead, the New York-based firm filed for bankruptcy on Monday.


Regulators are examining whether MF Global diverted some customer funds to support its own trades as the firm teetered on the brink of collapse.
http://dealbook.nytimes.com/2011/10/31/regulators-investigating-mf-global/?hp

[RandomGuy]

Nothing to see here.

Let's keep gutting the banking reform law.

[RandomGuy]

Wonder what the OWS crowd will make of this newest fuck up.

[boutons_deux]

"gutting the banking reform law."

fait accompli

[CosmicCowboy]

"gutting the banking reform law."

fait accompli

oh bullshit


theft is theft

[boutons_deux]

Romney Family Investment Group Partnered With Alleged Perpetrators Of $8 Billion Ponzi Scheme

In 2009, prosecutors announced charges against the Stanford Financial Group, which managed a portfolio of $8.5 billion, for running a “massive, ongoing fraud” against its investors. The Ponzi scheme bust was one of the largest in recent history, second only to Bernie Madoff, who perpetrated a fraud estimated to be around $17 billion. The Stanford Ponzi scheme wiped out the savings of thousands, including many Americanretirees across the country. In Texas, 1290 people lost their retirement savings because of the Stanford Ponzi scheme; in Louisiana, several hundred reportedlysuffered the same fate.

After news of the Ponzi scheme precipitated the collapse of Stanford in 2009, Taggpartnered with several of Stanford’s North Carolina executives to start a firm called Solamere Advisors. At least three prominent brokers who had worked for Stanford — Tim Bambauer, Deems May, and Brandon Phillips — joined Tagg to help run Solamere Advisors, a wealth management business located in Charlotte, North Carolina. “We are excited to be associated with such a highly capable group of financial advisors with a proven track record of meeting the needs of their clients throughout the Southeast,” said Tagg in a press release announcing Solamere Advisors, which borrows its the name from its parent company, Solamere Capital.


http://www.alternet.org/newsandviews/article/688251/romney_family_investment_group_partnered_with_alle ged_perpetrators_of_%248_billion_ponzi_scheme/

[ElNono]

Corzine doing what he does, tbh...

[boutons_deux]

Corzine learned the criminal ropes as Goldman Sacks CEO

[boutons_deux]

MF Global Admitted Using Client Money As Troubles Mounted: Official

http://i.huffpost.com/gen/391942/thumbs/r-MF-GLOBAL-CLIENT-MONEY-large570.jpg

MF Global, the failed securities firm led by Jon Corzine, admitted using clients' money as its financial troubles mounted, a federal official says.

http://www.huffingtonpost.com/2011/11/01/mf-global-admitted-using-client-money_n_1069757.html

====

Handslap comin soon!

[Borat Sagyidev]

http://www.newsinus.us/wp-content/uploads/2011/06/CHE-Guevara.jpg

[FuzzyLumpkins]

The notion of egalitarianism is amongst individuals and not individuals and firms. We desperately need a constitutional amendment setting the record straight.

[Wild Cobra]

Nothing to see here.

Let's keep gutting the banking reform law.

On the contrary. They broke the law by using customers money in their own investments.

I see jail time.

[boutons_deux]

I think it was not in their own investments, but to pay their operating expenses and compensation as MF's investments went sour.

[boutons_deux]

Just wait for it. In a few years, this will be resolved with a plea bargain, no admission of guilt, no compensation for the investors stolen from, and handslap for Corzine and friends.

Of course, they should all be jailed, barred from securities industry for life, and their possessions seized and sold, as is done with drug dealers and Madoff, to compensate their clients.

[scott]

Congresses' fault.

[RandomGuy]

oh bullshit


theft is theft

In the case of thefts involving hundreds of millions to billions of dollars though, a little regulatory oversight goes a long way.

[RandomGuy]

Just wait for it. In a few years, this will be resolved with a plea bargain, no admission of guilt, no compensation for the investors stolen from, and handslap for Corzine and friends.

Of course, they should all be jailed, barred from securities industry for life, and their possessions seized and sold, as is done with drug dealers and Madoff, to compensate their clients.

Once you are the CEO of an investment firm that the SEC calls a "massive Ponzi scheme", ain't no way any sane BOD will ever hire you again for anything beyond sweeping floors.

[baseline bum]

Congresses' fault.

:lol

[Winehole23]

http://dealbook.nytimes.com/2011/11/16/with-mf-global-money-still-lost-suspicions-grow/

[Agloco]

Congresses' fault.

:lmao

Queue Yoni-bot in 3, 2, 1.........

[RandomGuy]

MF Global trustee says $1.2B or more missing


WASHINGTON (AP) — The court-appointed trustee overseeing MF Global's bankruptcy says up to $1.2 billion is missing from customer accounts, double what the firm had reported to regulators last month.

...

Giddens's office said in a statement that "the apparent shortfall" was as much as $1.2 billion or more, but noted that the figure could change...

http://news.yahoo.com/mf-global-trustee-says-1-2b-more-missing-170614376.html

[boutons_deux]

Nobody from MF, certainly nobody near the top, all of whom will claim "I didn't know what was going on", will go to jail, be fined, or barred from securities. Some kind of extremely benign settlement. The money's gone, they didn't incinerate it, who got it?

[ElNono]

Money Found in Britain May Belong to MF Global (http://dealbook.nytimes.com/2011/11/28/money-found-in-britain-may-belong-to-mf-global/?hp)

About $200 million in customer money that vanished from MF Global is believed to have surfaced at JPMorgan Chase in Britain, according to people briefed on the matter. The discovery could be the most significant breakthrough in a monthlong hunt for the missing funds.

[Wild Cobra]

I'll bet they would have kept it if they could get away with it. now they are found out.

[boutons_deux]

UK bankruptcy rules are different from US rules. The $20M was due to UK bank, so they have every right to keep it. Good luck trying to get it back.

[Winehole23]

You should be more grateful, after all, whole the system is set up for your benefit.

Just keep lighting your cigars with $500 dollar bills, Mr. Boss Man.

[Winehole23]

On Monday, the CFTC finalized a rule that would prevent brokerages from client funds to loan themselves money through repurchase agreements. Corzine pushed for the delay of the rule — one of 1,100 conversations the CFTC has had on Dodd-Frank rulemakings — in a July meeting conducted by phone.


http://www.politico.com/news/stories/1211/69866.html#ixzz1g3TRXujr

[Winehole23]

This is one of those issues where there's no point in calling for more regulations. No matter what laws we have, we can't have regulatory heads breezily chatting about their enforcement plans with former co-workers who have huge financial interests resting upon their decisions. The Paulson case (http://www.bloomberg.com/news/2011-11-29/how-henry-paulson-gave-hedge-funds-advance-word-of-2008-fannie-mae-rescue.html), in which information about the rescue of Fannie and Freddie was casually disclosed to a group of hedge fund chiefs before the public knew about it, was a far worse thing than what Gensler is accused of.

Read more: http://www.rollingstone.com/politics/blogs/taibblog/jon-corzines-relationship-with-cftc-chair-gary-gensler-probed-20111207#ixzz1g3Tw1w6r

[boutons_deux]

Corzine says he had/has no idea where the missing $1T+ went, where it is, which is admission of criminal fiduciary responsibility by a CEO.

[boutons_deux]

Corzine’s Know-Nothing MF Global Defense

Jon Corzine’s evasive testimony before the Senate Agriculture Committee was scripted so as to lay foundations for his defense against customer and possibly shareholder suits and reduce the already very low odds of an indictment.

Although I’ll touch on other interesting elements shortly, the key item from his presentation was one that the New York Times’ Dealbook noted:

“I never intended to break any rules,” said Mr. Corzine, dressed in a dark suit but without his trademark sweater vest. “I know I had no intention to ever authorize the transfer of segregated moneys. I know what my intentions were.” Mr. Corzine has not been accused of any wrongdoing….

Still, over three hours of testimony, Mr. Corzine danced carefully around questions touching on the scandal of the missing funds, using phrases like “never intended” and “not to my knowledge.”

To prove fraud, you need to prove intent. So Corzine’s insistence that he didn’t intend for customer accounts to be raided would seem to get him off the hook, unless documents or the testimony from multiple employees establishes otherwise. His justification amounts to blaming any misdeeds on the fog of war: “Yes, I told staffers to be aggressive, but I never meant for them to bayonet old women and babies.”

In other words, if anything bad was done deliberately, it was all a really big miscommunication:

http://www.nakedcapitalism.com/2011/12/corzines-know-nothing-mf-global-defense.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capi talism%29

==

Oops, looting customers' trading accounts was just a big oops, a failure in communication.

[boutons_deux]

MF Global Trustee Sees $1.6 Billion Customer Shortfall

MF Global commodity customers whose cash vanished when the firm collapsed last year are owed $1.6 billion — up significantly from previous estimates — the trustee tasked with recovering the money said on Friday.

The revised figure reflects growing concerns that the trustee will not be able to claw back $700 million in customer money trapped overseas. Until now, the trustee did not include the $700 million when projecting the shortfall, hoping to avoid a battle with MF Global’s British arm, which is holding the customer money.

But now the trustee, James W. Giddens, has acknowledged that he is making little headway in recovering the money from KPMG, the court-appointed administrator for MF Global’s British subsidiary. That money, Mr. Giddens said, was held for American clients who traded on foreign exchanges.

The problem echoes a cross-border fight in the Lehman Brothers bankruptcy, when customer money was trapped overseas. More than three years later, that issue remains unresolved.

http://dealbook.nytimes.com/2012/02/10/mf-global-trustee-sees-1-6-billion-customer-shortfall/?ref=business

[Wild Cobra]

That's why we have FDIC insurance.

[boutons_deux]

Corzine wasn't running a bank, FDIC doesn't guarantee investment houses.

[Wild Cobra]

Corzine wasn't running a bank, FDIC doesn't guarantee investment houses.
So why are you complaining? Investors here chose a risky investment. People borrowing for houses aren't on the hook.

Are you siding with the rich for once?

Look. I'm just shaking things up. Even though investments were improperly diverted, there is risk associated with it. These people responsible should do serious jail time, but at the same time, don't invest what you can't afford to lose.

[boutons_deux]

So why are you complaining? Investors here chose a risky investment. People borrowing for houses aren't on the hook.

Are you siding with the rich for once?

Look. I'm just shaking things up. Even though investments were improperly diverted, there is risk associated with it. These people responsible should do serious jail time, but at the same time, don't invest what you can't afford to lose.

I'm complaining? GFY

investors gave money to an investment mgmt outfit that stole their money. That's not a "risk" they were signing up for.

"Are you siding with the rich for once?" GFY

[Winehole23]

PFGBest was among the firms that scrambled to reassure customers of the safety of their funds last November just after MF Global's collapse, posting a notice that said the firm "reports daily and monthly to regulators concerning customer segregated accounts." A number of former MF Global customers also moved their trading accounts to PFGBest.

But by November, it seems, funds at the Iowa brokerage were already missing. The NFA said in Monday's letter that previous customer account balances from February 2010 and March 2011 reported by the firm may have been inflated by as much as $190 million, with PFGBest only holding $10 million of a claimed $200 million.

In the letter, it said PFGBest clearing unit Peregrine Financial Group (PFG) had told the NFA just two weeks ago that it held $400 million in customer segregated funds, of which over $225 million was on deposit at the firm's bank.

But on Monday, after receiving information that PFG's founder and owner may have falsified bank records, the NFA said that only $5 million was on account at the bank days earlier.

"We had personal assurances from Wasendorf senior as recently as two weeks ago that they were not like MF Global," said Lauren Nelson, director of communications for Attain Capital, an introducing broker specializing in managed futures in Chicago.

"We've been speaking to other FCMs (Future Commission Merchants) in the hope we can eventually transfer our accounts over. But the fear is the funds are gone - the regulators have really dropped the ball."http://www.chicagotribune.com/business/sns-rt-us-broker-pfgbest-mfglobalbre869051-20120709,0,518337.story?page=2

[Winehole23]

UPDATE 1: Account-holders may not be so surprised to find who is the custodian for the PFGBest FX accounts: none other than huge MFGlobal fans, JPMorgan!http://www.zerohedge.com/news/pfgbest-now-mf-global-part-2-220-million-segregated-client-money-has-just-vaporized

[Winehole23]

Scandal junkies may have been puzzled last week when they learned that the 26,000 customers of Jon Corzine's MF Global, the infamous commodities firm that flamed out two years ago, leaving behind an unprecedented $1.5 billion shortfall in supposedly sacrosanct customer accounts, will likely now be receiving a stunning 100 cents back on every dollar of their principal.

The accomplishment is an unambiguous coup for special trustee James W. Giddens, of New York law firm Hughes Hubbard & Reed, who took charge of the smoldering wreckage on Halloween Day 2011. Giddens had never been expected to work such a miracle. But does the surprising asset recovery require a rewrite of the tale of alleged villainy that ushered Giddens onto the scene in the first place?
Corzine, the CEO who presided over MF Global's demise, surely thinks so.


The recovery -- approved by U.S. Bankruptcy Judge Martin Glenn last week, though it might yet be appealed -- "likely demonstrates that the segregated money never really was missing," says Corzine spokesperson Steven Goldberg of RLM Finsbury, "nor was it misused as part of some conspiracy or intentional wrongdoing, as has long been insinuated."
So where, exactly, was the $1.5 billion all this time?


Corzine's argument, as articulated by Goldberg, runs as follows: "As Mr. Corzine testified before Congress nearly two years ago, he has long believed that the majority of the so-called missing customer money was in the possession of certain financial institutions that held onto it to protect their own interests … In addition, $700 million of the [total] that was supposedly missing was secured customer money that was held up in the U.K. due to British bankruptcy laws."

http://features.blogs.fortune.cnn.com/2013/11/15/mf-global-jon-corzine/?iid=F_F500M

[Winehole23]

2012 headline:


A federal appeals court on Thursday upheld a ruling that puts Bank of New York Mellon ahead of former customers of Sentinel in the line of those seeking the return of money lost in the 2007 failure of the suburban Chicago-based futures broker.
The appeals court affirmed an earlier district court ruling that the bank had a "secured position" on a $312 million loan it gave to Sentinel, which turned out to have been secured by customer money.


Futures brokers are required to keep customers' funds in dedicated accounts to protect them from being used for anything other than client business.


However, Thursday's ruling suggests that brokerages can use customer funds to pay off other creditors, Sentinel trustee Fred Grede told Reuters.


"I don't think that's what the Commodity Futures Trading Commission had in mind" with its requirement that brokers keep customer money separate from their own, he said.
"It does not bode well for the protection of customer funds."


Worse, Grede said, is that the ruling suggests that a brokerage that allows customer money to be mixed with its own is not necessarily committing fraud.


That may raise the bar for proving that MF Global Holdings Ltd, under then-CEO Jon Corzine, misused customer funds as it scrambled to meet margin calls to back bets on European debt in the brokerage's final days. A $1.6 billion customer shortfall remains.
Corzine has said he did not know about the transfer of any customer money.

http://www.reuters.com/article/2012/08/10/us-sentinel-appeals-decision-idUSBRE87900T20120810

[Winehole23]

The appeals court said that "perhaps the bank should have known that Sentinel violated segregation requirements" but agreed with the district court's earlier ruling that "such a lack of care does not rise to the level of the egregious misconduct" needed to reprioritize a claim.


"That Sentinel failed to keep client funds properly segregated is not, on its own, sufficient to rule as a matter of law that Sentinel acted ‘with actual intent to hinder, delay, or defraud' its customers," U.S. Circuit Judge John D. Tinder wrote in the ruling.

[Winehole23]

Once you are the CEO of an investment firm that the SEC calls a "massive Ponzi scheme", ain't no way any sane BOD will ever hire you again for anything beyond sweeping floors.once in a lifetime opportunity:

http://www.cnbc.com/id/102603186

[boutons_deux]

"Thursday's ruling suggests that brokerages can use customer funds to pay off other creditors"

Holy Crap. but no funds from the brokerages employees' or mgmt's bank accounts is touched.

[Winehole23]

holy crap indeed. if it hasn't quite sunk in during the last two years, it may when the next recession comes. or not.

[boutons_deux]

holy crap indeed. if it hasn't quite sunk in during the last two years, it may when the next recession comes. or not.

It is now international law that bankrupt banks can "bail in" themselves, as Cyprus did, by paying off debts with depositors' funds.

[sickdsm]

Jon Corzine is contemplating starting up a hedge fund. Line 'em up.