MF Global’s Customer Agreement for trading in cash commodities, commodity futures, security futures, options, and forward contracts, securities, foreign futures and options and currencies includes the following clause:
“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.”
This is standard boiler plate in secutities agreements anywhere. Think about it. This might be a problem at other institutions where one might have a cash account and possibly stand to loose your cash investments if they go upside down.
Comments
Witness any of the Corzine testimony? He did a great job of taking the 5th w/o actually taking the 5th. 'having no intention of mixing funds' is hardly saying you didn't do it.
What I heard at the very onset was that he had taken some enormous bets on Greek bonds being made whole . . . with leverage - and they took a 50% haircut. Hell, just this past week, the Greeks are talking about only paying 25 cents on the dollar. Seems everyone told him NO, but he was not only adamant, but arrogant about the play, that 'he had been in gov't and knew these things'.
Now, that said, I really don't think he was the one skimming. He just got caught being too bloody sure of himself. As CEO, sure that should be criminal, but . . .
Someone grabbed the money while this was going on, OR, and this is what I honestly suspect, is that they, like every other one of these firms, has leakage here and there and most of the time, they don't have to face an audit of substance OR it's covered via valuations. So long as everyone keeps sending Uncle Bernie their money, things are fine. However, should something happen, my fault, your fault, nobodies fault, it all goes up in smoke, and in the rubble it's discovered that 'well, not all the money is there'.
At least that always seems to be the pattern.
And as long as white collar criminals get short time in a nice house with modest fines . . . Give 3 to 5 and a $500K find for ripping down $100M and sign me up. Most of the time, I'll get away with it anyway. Start giving them 20 hard and triple damages and this shit will stop.
peace,
rono
And then isn't that nice? He then goes on to become Governor & Senator over several years.
Then he becomes CEO of MF Global. MF Global was a dealer in US Treasury securities, Foreign-currency exchanges, Commodities futures, options and was a derivatives broker. That was their core business and Corzine then comes in and tries to turn them into a mini-Goldman Sachs making bigger and riskier bets.
My understanding was that he wasn't investing in Greek bonds (oh no that would have been suicide) but in other troubled bonds such as Italian bonds - in fact the majority of his bet were in Italian bonds and he also had investments in bonds from Portugal and Spain. They did this with a 30 to 1 leverage!
But trouble was brewing big time with the debt of these countries as we all have heard this year. None of these bonds defaulted but they were risky and in bad shape though. Not only was that risky but MF Global had $41B in assets but was not well capitalized because they had $39B in debt.
When word got out he was investing in risky European bonds and with how much money --- creditors started to put a squeeze on them and that combined with the leveraged bets blowing up on them....this led to their quick spiral down and Bankruptcy filing.
I can't believe the tie-in these people have between Wall-Street and Government and so you can understand why this Occupy Wall-Street movement had occurred. A small mistake by Martha Stewart and the SEC had to roar like a lion and act tough in putting her in jail but do nothing against the real slim-balls. Madoff had his hands so far up the azzes of the SEC and Wall-Street leaders that they become blind to what he was doing for decades.
I saw on tv one MF Global employee who was with the company for 16 years walking away from his last day on the job from MF Global locked-down due to Bankruptcy --- he wished he could meet Corzine to punch him in the face.
*And did you guys also hear that Congressional insider-trading is not illegal? No wonder their performance is better than most everyone else.
And now you've got some people in the Farming and Agriculture business affected....
***** *****
CHICAGO (Reuters) - For the first time in 25 years, Minnesota farmer Dean Tofteland has missed his deadline to buy seed for next spring's corn and soybean crops.
With $200,000 of his money yet to be returned from the accounts of MF Global, his former broker, the 49-year-old farmer has missed a $5,000 discount for early buyers, and is watching friends and neighbors snap up the best varieties of seeds.
In the latest sign of how MF Global's failure is continuing to cascade across the commodity industry, Tofteland and other farmers who have yet to recover more than a third of their money from the bankrupt broker now find themselves in a cash crunch that risks rippling far beyond the futures market.
Some farmers have had to postpone purchases of land or equipment. Tofteland still expects to sow his 1,000 acres in the southwest corner of the state, but may have to borrow money to do so.
Still, the delay in returning billions of dollars in customer funds more than a month after MF Global filed for bankruptcy is starting to affect actual decisions on the farm. This threatens to cloud the outlook for U.S. crops, warn farmers who have been ratcheting up pressure on the bankruptcy trustee to move faster to disperse any cash he secures.
http://en.wikipedia.org/wiki/Sarbanes–Oxley_Act
'having no intention of mixing funds'
Huh...........same exact thought for me, hearing his words. After that point, I did not view his testimony further.
Basically stating that he/others didn't plan for things to work out that way; but of course; not admitting it really happened. I am inclinced to believe that if a proper investigation is followed by the various authorities involved; criminal activity will be discovered. As to real charges being brought forth, well that is another matter, eh?
Take care,
Catch
My very cursory first impression (just from your writings - haven't really followed the details) is that Corzine got good legal advice, denying the crime (refuting a necessary element) while not commenting on the comingling which certainly occurred.
Keep in mind: I am not a lawyer, I haven't looked into the possible charges (to verify that they do entail intent), etc. As I said, just a first impression.
http://peterlbrandt.com/mf-global-for-dummies-i-e-congress/
If I did it - they would put me in jail in a heartbeat!!