MF Global Monkey Business

[miktay]

Read that a hedge fund MF Global went bust in October.

The 8th largest US bankruptcy.

Head of the firm Jon Corzine iza former US Senator...a former New Jersey governor and ex CEO of Goldman Sachs appeared before Congress to explain the goings on.

We get the usual mea culpa.

'I dont know how this happened'

'I am sorry'

'It wasn't my fault'

Yet $1.2 billion of client equity iz missing.

Thiz iz a lot of money 2 misplace.

This is worrisome.

Global finance iz based on trust.

Investors would cease 2 invest if they have no confidence that their equity iz safe.

This iza $1.2 billion mystery.

Investigators looking into the collapse are vague.

Thiz iz the shadow banking system.

This issue could get much bigger.

WASHINGTON (Reuters) - U.S. regulators now have a full picture of money transfers in the final days of bankrupt brokerage MF Global, and are working to sort out which transactions were legitimate, a top official told Reuters on Wednesday.

"We are far enough along the trail that we know where all the money went. Now it's just finding out which ones of those transactions are legitimate and which ones of them are illegitimate," said Jill Sommers, who is heading the Commodity Futures Trading Commission's review of MF Global.

"We certainly don't want to lead anyone to believe we don't know what happened. We do know, and we see where all the transactions went," she said.

In an interview, Sommers told Reuters that just because money was transferred out of a customer account to the broker-dealer account "doesn't mean it was illegitimate."

She declined to reveal details on the fund transfers until investigators have determined the purpose of all the transactions.

Lawmakers have increased the pressure on regulators to provide answers on what happened to hundreds of millions of dollars in missing customer funds.

In the past week, Congress has held two hearings during which they scolded MF Global's overseers for not closely policing the firm and for seemingly not being able to detect what created the shortfall in customer funds.

A trustee liquidating the firm has estimated the shortfall could be as high as $1.2 billion (775.6 million pounds).

MF Global officials, including former chief executive Jon Corzine, have told lawmakers they simply do not know where the money is, and deny authorizing the misuse of customer money.

Regulators have said the firm may have diverted the funds for its own needs as it suffered a liquidity crisis.

There is no timetable for when the review will be complete, but investigators are making "really good progress every day," said Sommers.

MF Global collapsed in late October after the firm was forced to reveal that it had made a $6.3 billion bet on European sovereign debt, spooking investors and customers.

Investigators are now trying to back up thousands of transactions with underlying documentation such as a signature or email to determine whether the customer approved the transfer into a broker-dealer account.

"That's what we've ran into now, just parsing out what the purpose of the transactions are," Sommers said.

Until regulators can determine which transactions were illegitimate, they will not be able to determine the shortfall in customer funds, and how much money will ultimately be distributed back to customers, she said.

Under certain circumstances, futures commission merchants are allowed to take customer funds and invest them in a range of approved securities.

In exchange for using the cash, firms are required to back it up with high-quality collateral such as U.S. government securities.

[edyle]

The criminals have been for the last decade becoming more overt in their takeover of the United States.

How does that old saying go?
The last act of a corrupt government is to plunder the economy.

[miktay]

The criminals have been for the last decade becoming more overt in their takeover of the United States.



How does that old saying go?



The last act of a corrupt government is to plunder the economy.

Yes. Edyle.

Corruption is rampant.

But u may have overlooked a small detail.

U assume that Mr. Corzine broke an existing law.

U assume that he iz getting away with an illegal act.

Consider the possibiliry that this funny business may be legal.

This scheme*is worth trillions.

This is the shadow banking system.

Here again iz the quote fm the investigator.

In an interview, Sommers told Reuters that just because money was transferred out of a customer account to the broker-dealer account "doesn't mean it was illegitimate."

[edyle]

Yes. Edyle.
Corruption is rampant.
But u may have overlooked a small detail.
U assume that Mr. Corzine broke an existing law.
U assume that he iz getting away with an illegal act.
Consider the possibiliry that this funny business may be legal.
This scheme*is worth trillions.
This is the shadow banking system.
Here again iz the quote fm the investigator.

Originally Posted by edyle
The criminals have been for the last decade becoming more overt in their takeover of the United States.
How does that old saying go?
The last act of a corrupt government is to plunder the economy.

You are correct;

However I did not overlook the possibility that this business "may be legal" as you put it. I would say possibly not yet illegal;

[but more likely if not prosecuted it's because no lawyer is going to go though the work using the appropriate laws to file the case or if he does he's either going to get bribed, 'convinced', or simply dead (probably by 'suicide').]

Although I did not mention it in the above post;
I have stated before probably on more than one occasion but probably on the Crime forum not so much the Finance forum, that crimes are committed that are not yet illegal.
I hope we don't get into confusion over words.

If I shoot you in the head on the moon, just because there ain't enough food for the both of us, as far as I'm concerned, and I would think you would agree, I would have committed a crime. There's no country on the moon with legal jurisdiction and laws on the moons books, so I would think it would not be illegal for me to murder you, but wouldn't murder still be murder ?

In the same way, if somebody finds a new way to steal money by the boatloads and there are not financial laws specifically impeding him for doing whatever he is doing, IT IS STILL STEALING. And I would bet that a good lawyer WOULD (and should) be able to prosecute the crime under existing SIMPLE law.

There are lots of little laws that come into being to SPECIFICALLY allow or disallow specific activities as a result of debate, but the little laws cannot overrule the basic law.

When all else fails, you go back to BASIC LAW, file charges, and LET THE JURY DECIDE THE CASE.

[miktay]

No officer of MF Global has been charged to date...

'One' shud arks the question..If a bidnezz can legally usurp $1.2 billion of customer equity...

How many mo bidnezzes are/can/will do this?

This iz modern global finance.

We are headed 4a global recession. Equity will be scarce.

People will covet. Some will take.

The law allows them 2 take.

[edyle]

No officer of MF Global has been charged to date...

'One' shud arks the question..If a bidnezz can legally usurp $1.2 billion of customer equity...

How many mo bidnezzes are/can/will do this?

This iz modern global finance.

We are headed 4a global recession. Equity will be scarce.

People will covet. Some will take.

The law allows them 2 take.

I think it's a BIT more like a mafia boss with a smirk on his face telling you
"What are You gonna do about it...."

You bring up the legality issue again:
"If a bidnezz can legally "
Keyword is 'if', and legal is a tricky word.
Did they 'legally' usurp 1.2 billion? Some time later on after the lawsuits are filed, maybe there would be a clearer answer.

There's difference between "legal" and "not yet ruled as illegal".

Sometimes a act is quite clearly illegal and known to be so by the perpetrator, but he has planned it and does it in such a way that he expects to get away with it anyway while the courts have to PROVE against him; meanwhile of course, he's bribing the lawyers, hopefully the judge, and when push comes to shove, when billions are at stake, there's always room for somebody to have an accident.

[lexbarker]

No officer of MF Global has been charged to date...

The law allows them 2 take.

Is it because he "hosted" a 35,000 dollar a plate dinner for Obama last summer?

[miktay]

Is it because he "hosted" a 35,000 dollar a plate dinner for Obama last summer?

Lex:

This is a factor.

But this doesn't seem to be the core issue.

The bigger emerging picture iz these actions iare legal in the US and UK.

For perspective B. Madoff was arrested and convicted 4 violating US securities laws.

The scheme that allowed Corzine to sponge $ iz allowed under US & UK securities law.

It appears that these acts are written into the law.

[edyle]

http://www.washingtonpost.com/busine...ntO_video.html

Duffy Contradicts Corzine's MF Global Testimony

Dec. 14 (Bloomberg) -- Douglas Burns, a former federal prosecutor, talks about the testimony of former MF Global Holdings Ltd. Chief Executive Jon S. Corzine yesterday to a Senate committee and the contradictory testimony of CME Group chairman Terrence Duffy. Burns speaks with Scarlet Fu on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

[lexbarker]

Lex:

This is a factor.

But this doesn't seem to be the core issue.

The bigger emerging picture iz these actions iare legal in the US and UK.

For perspective B. Madoff was arrested and convicted 4 violating US securities laws.

The scheme that allowed Corzine to sponge $ iz allowed under US & UK securities law.

It appears that these acts are written into the law.

Accounts that are CASH accounts are suppose to be in trust with another company. Those accounts were drained also, which is illegal. I can see it happening to a MARGIN account.

[miktay]

Accounts that are CASH accounts are suppose to be in trust with another company. Those accounts were drained also, which is illegal. I can see it happening to a MARGIN account.

Lex:

Margin accounts supply approx $18 trillion of collateral to the shadow banking system.

Thatz alotta gunzai.

[lexbarker]

Lex:

Margin accounts supply approx $18 trillion of collateral to the shadow banking system.

Thatz alotta gunzai.

Noted. But, it seemed that the Cash account was never entrusted in this case or they used some monkey business to grab it.

[edyle]

Noted. But, it seemed that the Cash account was never entrusted in this case or they used some monkey business to grab it.

Maybe no customer actually retained a valid enforceable copy of their account CONTRACT;
Do you have a copy of your bank account CONTRACT? Who bothers?

Its either that or the fine print really allows them to do what they did; or they "changed" the contract to make it so without consent of the customers and work out that by the time customers win lawsuit in court they still come out on top.

[miktay]

Noted. But, it seemed that the Cash account was never entrusted in this case or they used some monkey business to grab it.

Lex: it iz not clear how many cash (read: non-margined) accounts there were at MF Global.

MF brokered commodities and securities.

Investors/Speculactors/Hedgers in futures usually hold margin accounts with some cash to buffer for margin calls.

Pure non margin accounts would prob be few but I could be wrong.

What iz also not clear iz who holds title to securities pledged as collateral 4 margin accounts.

If customers hold title outright then ownership iz clear.

If the brokerage holds title on behalf of the customer the matter becomes complicated.

This iz one of the issues. Title.

[miktay]

Maybe no customer actually retained a valid enforceable copy of their account CONTRACT;
Do you have a copy of your bank account CONTRACT? Who bothers?

Its either that or the fine print really allows them to do what they did; or they "changed" the contract to make it so without consent of the customers and work out that by the time customers win lawsuit in court they still come out on top.

Availability doesn't seem to be an issue. The agreement and disclosures are available online.

Here iz the relevant passage (emphasis mine):

7. Consent To Loan Or Pledge* You hereby grant us the right, in accordance with Applicable Law, to borrow, pledge, repledge, transfer, hypothecate, rehypothecate, loan, or invest any of the Collateral, including, without limitation, utilizing the Collateral to purchase or sell securities pursuant to repurchase agreements [repos] or reverse repurchase agreements with any party, in each case without notice to you, and we shall have no obligation to retain a like amount of similar Collateral in our possession and control.”

[miktay]

Most money managers and pundits are unaware of the implications of MF Globals collapse.

Gerald Celente iza hi profile pundit. He lost $100K+

Per Celente we now know what the MF in MF Global stands for....

[lexbarker]

According to Max Keiser and Reggie Middleton, the monkey business was done through London using their crooked laws.

[miktay]

The laws the UK are 'crookeder' than in the US but both countries allow brokerages to pledge client funds as collateral to 3rd parties.

The arcane term used 2 describe thiz right iz hypothecation. (Thanks to Redman 4 helping make sense of the terminology)

Hypothecation*is the practice where a borrower pledges*collateral*to secure a*debt. The borrower retains ownership of the collateral, but it is "hypothetically" controlled by the creditor in that he has the right to seize possession if the borrower defaults.*

http://en.m.wikipedia.org/wiki/Hypothecation*
*
Thiz...methinks iz the crux of the matter: who has claim 2 ur cash sitting inna mutual fund, brokerage, insurance company or finance house?*

[miktay]

Where there iz confusion and monetary losses u can be sure a banker lurks somewhere in the vicinity...

BY AARON LUCCHETTI

J.P. Morgan Chase & Co. has returned roughly $600 million that was ensnared at the bank when MF Global Holdings Ltd. collapsed in October, people familiar with the matter said.

Most of the payments haven't been disclosed publicly, and a bankruptcy trustee representing customers of the failed securities firm might pursue J.P. Morgan for as much as several hundred million dollars in additional claims, according to a person familiar with the investigation.

Still, the New York bank's payments are a sign of progress in efforts to fill the estimated $1.6 billion hole left in customer accounts at MF Global. Money ...

http://online.wsj.com/article/SB1000...850068120.html

[greall]

The laws the UK are 'crookeder' than in the US but both countries allow brokerages to pledge client funds as collateral to 3rd parties.

The arcane term used 2 describe thiz right iz hypothecation. (Thanks to Redman 4 helping make sense of the terminology)



http://en.m.wikipedia.org/wiki/Hypothecation*
*
Thiz...methinks iz the crux of the matter: who has claim 2 ur cash sitting inna mutual fund, brokerage, insurance company or finance house?*

Buh das how we collateralize some of our loans...FDs,UTC accounts,etc.

Buh ah leavin Finance...ah go make more money as a doctor...no wonder Falcon does b so cheery... http://www.guardian.co.tt/news/2012-06-03/fuad-furious

Greg

[miktay]

Buh das how we collateralize some of our loans...FDs,UTC accounts,etc.

Buh ah leavin Finance...ah go make more money as a doctor...no wonder Falcon does b so cheery... http://www.guardian.co.tt/news/2012-06-03/fuad-furious

Greg

Yuh going and join the T&T medical cartel?

Cartels mek $. But not as much as bankers.

Case in point: hypothecation.

If a banker lends free money. What iz his return on capital?

[greall]

Hmmm...reading something here online...taking bets as to the order in which the following countries will crash:Spain,France,Portugal,Italy and Belgium.

Greg

[vaio]

Yuh going and join the T&T medical cartel?

Cartels mek $. But not as much as bankers.

Case in point: hypothecation.

If a banker lends free money. What iz his return on capital?

bankers not a cartel too?

[miktay]

bankers not a cartel too?

Absolutely. I should have been clearer.

Banks have been a cartel 4 so long it iz sometimes taken 4 granted.

Bankers run the show.

[greall]

Absolutely. I should have been clearer.

Banks have been a cartel 4 so long it iz sometimes taken 4 granted.

Bankers run the show.

They fund who they like and starve who they don't.Governments can pay lip service and try to control and regulate but they pretty much do what they want.

Greg