Is MF Global Getting a Free Pass?

Joe Nocera
The New York Times

It’s sure starting to look as if Jon Corzine is going to get away with it.

By now, it has been well established that Corzine’s former firm, MF Global, committed the sin of sins for a broker-dealer. In late October, during the final, desperate days before it entered bankruptcy proceedings, its executives took money from segregated customer accounts — money that belonged not to MF Global but to the farmers and commodities traders that were its clients — and used it to prop up its rapidly collapsing business. Nor was this petty cash: of the $6.9 billion in customer assets that MF Global held, a stunning $1.6 billion is missing. There is virtually no chance that the full amount will ever be recovered.

Let’s not mince words here. These executives committed a crime. Virtually every knowing violation of the Commodities Exchange Act is a crime, but taking money from segregated customer accounts is at the top of the list…

… As for the chaos, you bet it was chaotic at the end. How could it not have been? Last month, James W. Giddens, the bankruptcy trustee for the broker-dealer arm of MF Global, issued a report that vividly described the scene: “The rush to meet funding needs … led to billions of dollars in securities sales, draws on credit facilities and a web of intercompany loans. … The company’s computer systems and employees had trouble keeping up. … A number of transactions were recorded erroneously or not at all. …” And so on. Well, fine. But is it really plausible that you can take $1.6 billion — nearly 25 percent of the customer assets under management — and not know you’ve used customer money?…

The complete op-ed is at The New York Times.


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