Thread: Missing $1.6 Billion MF Global Funds: Traced!

Missing $1.6 Billion MF Global Funds: Traced!

Before:
- Congressional Investigators: MF Global’s Jon Corzine Ordered Funds Moved To JP Morgan
- CFTC Pulls ‘JPMorgan Whistleblower’ Letter

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- Missing $1.6 Billion MF Global Funds: Traced!(New York magazine, April 25, 2012):

The high-stakes game of lost-and-found for the missing $1.6 billion MF Global funds apparently reached a conclusion on Tuesday. According to CNN Money, investigators hunting the funds in the wake of the Jon Corzine–led brokerage firm’s collapse located the massive sums of customer money. “We can trace where the cash and securities in the firm went, and that we’ve done,” James Giddens, a trustee overseeing MF Global’s liquidation, told the Senate Banking Committee on Tuesday, adding that the investigation is “substantially concluded.”

After MF Global declared bankruptcy on October 31, 2011, investigators discovered that the firm used customer money to pay its own obligations. CNN Money details where investigators said they located the funds.

Roughly $700 million of the missing money is now locked up with MF Global’s subsidiary in the United Kingdom, where Giddens and his team are engaged in litigation to have it returned to U.S. customers. Giddens said he is “reasonably confident” that these funds will be recovered, though he added that it will be a lengthy process with no guarantee of success.

Another $220 million was transferred inadvertently from the accounts of securities customers to those of commodities customers. That money is now in limbo amid a dispute over which customers it belongs to, said Kent Jarrell, a spokesman for Giddens.

The final $680 million or so was transferred to other financial institutions with which MF Global did business, including a substantial portion that went to JPMorgan.

Louis Freeh, the trustee for MF Global’s parent company, which is involved in a separate investigation (and is seeking to recover funds for creditors), also testified at the Senate hearings. He addressed whether or not MF Global will face fraud or other charges for their roles in the collapse. “At this point, literally everything is on the table, both individual persons as well as institutions,” Freeh said. CNN reports that Giddens may file civil claims against MF Global executives, including Corzine, for breach of fiduciary duties and violations of federal law governing commodities trading.

To date, MF Global customers have recovered about 70 percent of their money and will collect more soon, as a Manhattan bankruptcy judge approved on Tuesday another distribution that will push the total amount recovered to 80 percent.

Customers will have to wait longer for a pound of Corzine’s flesh.

Missing $1.6 Billion MF Global Funds: Traced!

MF Global: “This Was a Massive Theft”

Posted by Larry Doyle on April 30, 2012 7:56 AM


Six months and counting.

The lives of countless numbers of families and individuals are likely forever changed by what transpired at MF Global. Yet there remains no real accounting nor full retribution for the fiasco which unfolded within the walls of the firm that traced its roots to the late 1700s.

Certainly we can expect that trustees and regulators will put forth some thousand page reports trying to detail the minute by minute demise of MF Global. Do you think those reports will mean anything to the lives of the people impacted? I don’t. Why? How do you recapture trust? When there is NO real trust, there is NO real justice, and NO real closure. It is that simple.

Who in America would not agree right now to grant Edith O’Brien, the junior executive in MF Global’s back office, full and total immunity so we may learn even more details about this travesty? Where is the pressure in Washington to make that happen? By not granting Ms. O’Brien immunity, our supposed political leaders have shown their true colors — and they are NOT red, white , and blue.

Utilizing the language of “the street”, what do those in the Chicago trading pits think happened at MF Global? As so succinctly stated in today’s Financial Times article, MF Global Leaves Industry Scarred:

John Roe, leader of the Commodity Customer Coalition, a customer group, and an introducing broker at BT Trading in Chicago, a firm that had all $15m or so of its client funds at MF Global, says his members would be “beyond dejected” if there were no prosecution. “There should be a criminal consequence,” he says. “The system itself is at risk if there isn’t.”

“Someone at MF Global made the decision to swipe customer money,” Mr Roe adds. “They need to pay a price for that. Otherwise, our members will feel the marketplace isn’t what they thought it was.”

“This was a massive theft,” says Jeff Carter, a Chicago futures trader and blogger. “The futures industry battles the equity industry for dollars. Brokers compete against each other. If I am a customer and have a choice between trading crude oil futures or a crude oil ETF, the equity broker has a huge leg up against the futures broker if no one from MF stands trial – specifically, top management.”

Juxtapose the comments of Mr. Roe and Mr. Carter to the comment I highlighted yesterday by Harvard professor Niall Ferguson:

When countries improve rule of law, property rights, and investor protections, and when regulation becomes more transparent and corruption reduced, there are major payoffs. The World Justice Project says the U.S. has been deteriorating for close to 10 years by all these measures…

I repeat, why no immunity for Ms. O’Brien? Let this be the legacy of those in Washington who would cast their lots with the likes of Jon Corzine and others rather than standing up for Mr. Roe, Mr. Carter, and the American public at large.

Without making light of it, this entire MF Global scenario reminds me of another Chicago caper in which those disguised as the Feds were also shown to be part of the “the sting”. While the clip below may provide a little bit of entertainment value, regrettably the pain experienced by many of our fellow citizens is all too real.

Can somebody explain to me again why Ms. O’Brien is not granted immunity?

In the meantime, let’s go back to the mid ’70s and enjoy this classic scene. Too bad the MF Global mess was not only a movie, as well.



Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

This entry was posted on Monday, April 30th, 2012 at 7:56 AM and is filed under General, MF Global, Wall Street Washington Incest. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

MF Global: “This Was a Massive Theft” | Sense on Cents