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The stuff you won't see in the liberal media (click "Replies" for top stories)
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Beckwith

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Interesting, but not Obama-related

 

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DrJim

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Bloomberg initially broke the story on Friday 3/23/2012 about Corzine directing the transfer of his clients legally segregated money to cover his own in-house trading losses....

MF’s Corzine Ordered Funds Moved to JP Morgan, Memo Says

By Phil Mattingly and Silla Brush
Mar 23, 2012 7:07 PM ET

Jon S. Corzine, MF Global Holding Ltd. (MFGLQ)’s chief executive officer, gave “direct instructions” to transfer $200 million from a customer fund account to meet an overdraft in a brokerage account with JPMorgan Chase & Co. (JPM), according to a memo written by congressional investigators.

Edith O’Brien, a treasurer for the firm, said in an e-mail quoted in the memo that the transfer was “Per JC’s direct instructions,” according to a copy of the memo obtained by Bloomberg News. The e-mail, dated Oct. 28, was sent three days before the company collapsed, the memo says. The memo does not indicate whether that phrase was the full text of the e-mail or an excerpt.

Enlarge imageJon Corzine

Jon Corzine

Jon Corzine

Andrew Harrer/Bloomberg

Jon S. Corzine, former chairman and chief executive officer of MF Global Holdings Ltd., during a House Financial Services Committee hearing in Washington on Dec. 15, 2011.

Jon S. Corzine, former chairman and chief executive officer of MF Global Holdings Ltd., during a House Financial Services Committee hearing in Washington on Dec. 15, 2011. Photographer: Andrew Harrer/Bloomberg

March 23 (Bloomberg) -- Bloomberg News reporter Phil Mattingly and Seth Berenzweig, managing partner at Berenzweig Leonard, talk about a Bloomberg News report that Jon S. Corzine, MF Global Holding Ltd.’s chief executive officer, gave “direct instructions” to transfer $200 million from a customer fund account to meet an overdraft in one of the brokerage’s JPMorgan Chase & Co. accounts in London, according to an e-mail sent by a firm executive. They speak with Trish Regan and Adam Johnson on Bloomberg Television's "Street Smart." (Source: Bloomberg)

March 23 (Bloomberg) -- Bloomberg News reporter Phil Mattingly, Jay Pelosky, consultant at J2Z Advisory, Bloomberg View columnist William Cohan, Robert Brusca, president of Fact & Opinion Economics, and Bloomberg Television markets correspondent Joshua Lipton talk about a Bloomberg News report that Jon S. Corzine, MF Global Holding Ltd.’s chief executive officer, gave “direct instructions” to transfer $200 million from a customer fund account to meet an overdraft in one of the brokerage’s JPMorgan Chase & Co. accounts in London, according to an e-mail sent by a firm executive. They speak with Pimm Fox on Bloomberg Television's "Taking Stock." (Cohan is a Bloomberg View columnist. The opinions expressed are his own. Source: Bloomberg)

March 23 (Bloomberg) -- Jon S. Corzine , MF Global Holding Ltd.’s chief executive officer, gave “direct instructions” to transfer $200 million from a customer fund account to meet an overdraft in one of the brokerage’s JPMorgan Chase & Co. accounts in London, according to an e-mail sent by a firm executive. Bloomberg's Julie Hyman reports on Bloomberg Television's "Street Smart." (Source: Bloomberg)

March 23 (Bloomberg) -- Bart Chilton, a commissioner at the U.S. Commodity Futures Trading Commission, talks about the investigation into bankrupt commodities broker MF Global Inc. and prospects for regulations that would place tighter restrictions on firms' use of investor funds. Chilton speaks with Scarlet Fu on Bloomberg Television's "InBusiness With Margaret Brennan." (Source: Bloomberg)

Enlarge imageMF Global

MF Global

MF Global

Stephen Yang/Bloomberg

MF Global Holdings Ltd. signage is displayed at 60 East 53rd Street in New York.

MF Global Holdings Ltd. signage is displayed at 60 East 53rd Street in New York. Photographer: Stephen Yang/Bloomberg

O’Brien’s internal e-mail was sent as the New York-based broker found intraday credit lines limited by JPMorgan, the firm’s clearing bank as well as one of its custodian banks for segregated customer funds, according to the memo, which was prepared for a March 28 House Financial Services subcommittee hearing on the firm’s collapse. O’Brien is scheduled to testify at the hearing after being subpoenaed this week.

“Over the course of that week, MF Global (MFGLQ)’s financial position deteriorated, but the firm represented to its regulators and self-regulatory organizations that its customers’segregated funds were safe,” said the memo, written by Financial Services Committee staff and sent to lawmakers.

Steven Goldberg, a spokesman for Corzine, said in a statement that Corzine “never gave any instruction to misuse customer funds and never intended anyone at MF Global to misuse customer funds.”

JPMorgan Overdraft

Vinay Mahajan, global treasurer of MF Global Holdings, wrote an e-mail on Oct. 28 that said JPMorgan was “holding up vital business in the U.S. as a result” of the overdrawn account, which had to be “fully funded ASAP,” according to the memo.

Barry Zubrow, JPMorgan’s chief risk officer, called Corzine to seek assurances that the funds belonged to MF Global and not customers. JPMorgan drafted a letter to be signed by O’Brien to ensure that MF Global was complying with rules requiring customers’ collateral to be segregated. The letter was not returned to JPMorgan, the memo said.

The money transferred came from a segregated customer account, according to congressional investigators. Segregated accounts can include customer money and excess company funds.

Corzine Testimony

Corzine, 65, in testimony in front of the House panel in December, said he did not order any improper transfer of customer funds. Corzine also testified that he never intended a misuse of customer funds at MF Global, and that he doesn’t know where client funds went.

“I never gave any instruction to misuse customer funds, I never intended anyone at MF Global to misuse customer funds and I don’t believe that anything I said could reasonably have been interpreted as an instruction to misuse customer funds,”Corzine told lawmakers in December.

In his statement, Goldberg said Corzine did not specify which funds should be used to replenish the JPMorgan account.

“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,” Goldberg said. “Nor was he informed that customer funds had been used for that purpose.”

$1.6-Billion Shortfall

The bankruptcy trustee overseeing the liquidation of the company’s brokerage subsidiary has estimated a $1.6-billion shortfall between customer claims and assets available.

Lawmakers and investigators from the Commodity Futures Trading Commission, Securities and Exchange Commission andDepartment of Justice have been reviewing events leading up to MF Global’s bankruptcy filing. Executives including Corzine, a Democrat who served in the Senate before he was elected governor of New Jersey, gave testimony on the collapse at three congressional hearings last year.

“If client funds were transferred at his direction, it raises new questions,” Seth Berenzweig, managing partner at Berenzweig Leonard LLP, a law firm in McLean, Virginia, said in an interview with Bloomberg Television. “This is a new storm cloud that is now headed for Jon Corzine and it raises a lot of issues.”

Representative Randy Neugebauer, a Texas Republican and chairman of the Financial Services oversight and investigations subcommittee, is preparing a final report on his investigation into the firm’s failure.

‘What Went Wrong’

“One of the goals of our investigation is not only to find out where the money went but to identify what went wrong in order to prevent this from happening again,” Neugebauer said in a statement.

O’Brien is scheduled to appear before lawmakers with Christine Serwinski and Laurie Ferber, two other MF Global executives named by Corzine as being involved in the transaction, according to the memo. Henri Steenkamp , the firm’s chief financial officer, is also scheduled to testify, as is a representative from JPMorgan who has not yet been identified.

MF Global and its brokerage sought Chapter 11 bankruptcy after a $6.3 billion bet on the bonds of some of Europe’s most indebted nations prompted regulator concerns and a credit rating downgrade. Corzine quit MF Global Nov. 4.

During his testimony, O’Brien was identified by Corzine as someone with knowledge of a transfer of funds from customer accounts before the firm sought bankruptcy protection Oct. 31.

Reid H. Weingarten, O’Brien’s lawyer, did not immediately respond to a phone call and e-mail seeking comment.

The memo’s account of the e-mail exchanges aligns with whatTerrence Duffy, the executive chairman at CME Group Inc. (CME), told lawmakers during a December congressional hearing. Auditors at CME, which had authority to oversee MF Global, learned from an employee of the brokerage that Corzine knew about the loans involving a European affiliate, Duffy told committee members.

DrJim

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Ann Barnhardt of Barnhardt Capital comments on the above video.   Ms. Barnhardt lost funds in the MF Global ripoff.  in fact she closed the doors to her Commondies Investment firm because of this...
 
 
Koutoulas Faces Reality: Financial System Toast

Posted by Ann Barnhardt - March 21, AD 2012 1:43 PM MST

Remember James Koutoulas? He's the Roy Orbison-looking guy who ran a hedge fund and got raped by MF Global. Mr. Koutoulas was also a lawyer, so he decided to dust off his J.D. and fight in court, and became a "voice of the customers." When I shut Barnhardt Capital Management down in November of 2011, he criticized me for not sticking around and fighting it out - which is a very faulty argument because I and all brokers are basically HELPLESS to defend client funds with FCMs, and because I would be risking not just my own money, but orders of magnitude more at risk would be MY CLIENTS' funds. My client book value ranged from twenty to sixty times my personal posted capital, which is very standard. The capital I had to post personally was basically to protect my clearing firm against two things: a big trading error on my part, OR a client skipping out on a deficit balance. It's one thing to lay down your own chips. It is quite another to cavalierly lay down someone else's chips. Big, big moral difference there.

Well, Mr. Koutoulas, after staring down the beast from inside the pit for these last five months, has reached the same conclusion that I reached two weeks after the MF Global collapse. The U.S. financial system is irretrievably broken. All hands abandon ship.

I don't know who the interviewer is, but his "sympathy for Corzine" schtick is total bee-ess. You can't "temporarily steal" someone else's funds to finance your suicidally stupid house accounts. There is nothing, and I mean NOTHING that justifies monkeying around with customer money. This moral equivocation crap has got to stop.

Interviewer: If he [Corzine} gets off doing this scott free without any investigation [uh, how about a criminal conviction??], what does that say to the future?

Koutoulas: It says that you should get your money out of the U.S. financial system, because people can go in and take money out of not just a bank account, but something that is supposed to be much safer than a bank account, and have no repercussions, and this cannot stand. And if it does, America's financial system is not safe for anybody.

DrJim

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DrJim

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Hard evidence has been found that shows Corzine ordered funds to be transfered out of Client's segregated funds to cover MF Global's Proprietary trading losses...
 
From Karl Denninger's Market Ticker      http://market-ticker.org/post=203847
 
 
"MFer Global: Clawbacks AND Handcuffs NOW!

This ought to be over about now.

Jon S. Corzine, MF Global Holding Ltd. (MFGLQ)’s chief executive officer, gave “direct instructions” to transfer $200 million from a customer fund account to meet an overdraft in one of the brokerage’s JPMorgan Chase & Co. (JPM)accounts in London, according to an e-mail sent by a firm executive.

Edith O’Brien, a treasurer for the firm, said in an e-mail sent the afternoon of Oct. 28, three days before the company collapsed, that the transfer of the funds was “Per JC’s direct instructions,” according to a copy of a memo drafted by congressional investigators and obtained by Bloomberg News.

Where's the indictment?

Corzine is entitled to the presumption of innocence but the victims of this apparent scheme are entitled to justice. Where is it? Four+ months into this we now have prima-facie evidence that Corzine ordered a transfer from customer segregated funds to meet a margin call against the firm's proprietary trading.

If there's an argument that this sort of transfer would be lawful I'd love to see it.

More to the point, if this sort of transfer is lawful then no person in this country can ever trade anything in a brokerage again until it is rendered unlawful and assurances are available that this conduct will result in long prison sentences and personal liability.

If you do then you are a rube, as your funds are simply there for the purpose of (legally) stealing them when, not if your brokerage finds itself underwater.

There's a further problem:

Barry Zubrow, JPMorgan’s chief risk officer, called Corzine to seek assurances that the funds belonged to MF Global and not customers. JPMorgan drafted a letter to be signed by O’Brien to ensure that MF Global was complying with rules requiring customers’ collateral to be segregated. The letter was never returned to JPMorgan, the memo said.

So JP Morgan suspected the funds were stolen and drafted a letter demanding a written assurance they were not. They never got that assurance, which means they knew the funds were impaired.

This in turn means they effectively received stolen property and thus have destroyed any argument they might have in "good faith" reception of the funds, which in turn means that all of those funds must be immediately clawed back.

We're six months into this folks, and the customers of MFer Global still don't have their money. But now we have not just the belief that the company knowingly took customer funds to satisfy a margin call on their proprietary positions, we have evidence they did so.

And we further have hard evidence that JP Morgan knew the funds were taken from customer segregated accounts and were not MF Global's to disburse.

If we do not see indictments and the clawback of those funds in the immediate future every American will have no choice but to consider the federal government to be nothing more than a bunch of felonious thugs -- from the Office of the President on down."

 

 

 

Confidence in the safety of the Financial Markets is at tremendous risk if Corzine is not held accountable for his acts of Grand Larceny...

 

 

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