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Jon Corzine v Edith O’ Brien: Let’s Rumble

Posted by Larry Doyle on January 18, 2012 11:41 AM |

Some of the largest financial debacles of our lifetime revolved around individuals who were able to effectively arbitrage, that is knowingly manipulate, their back office operations.

I refer specifically to the financial follies surrounding Joe Jett and Kidder Peabody in the early 1990s, Nick Leeson and Barings in 1995, and Yasuo Hamanaka and Sumitomo in the copper scandal of the mid 1990s.

I would maintain that due to a shortage of quality collateral in our financial system, it is highly likely that over the course of the last few years many of our large financial firms have knowingly manipulated their back offices and accounting operations.

In fact, in conjunction with these practices, I would assert that our financial regulators have likely looked the other way in the process.

Were the powers that be at MF Global, including the former Wall Street and Washington heavyweight Jon Corzine, arbitraging their back office?

Were Corzine and team compelled to do this to grow their revenue while also given their lack of accessibility to the Federal Reserve’s discount window?

Did the misappropriation of approximately $1.2 billion in customer funds result from the front office at MF Global running over the back offfice?

Are there individuals from MF Global’s back office who hold the answers to questions which MF Global’s customers and all of America would like to learn?

Would these individuals be in a position to implicate Mr. Corzine and others for their actions?

Would America then learn whether Jon Corzine is “too big to indict”?

Let’s navigate as the Wall Street Journal opens the door to these questions in writing, MF Global Probe Turns Its Focus to the Back Office:

Investigators on the hunt for an estimated $1.2 billion in customer money missing since MF Global Holdings Ltd. collapsed are zeroing in on the securities firm’s back-office operations in Chicago, people familiar with the situation said.

One back-office employee has told people she disputes congressional testimony by Jon S. Corzine, MF Global’s former chairman and chief executive, that she provided assurance that a $200 million transfer was proper, according to people familiar with the matter.

Really? Who might this individual be? Let’s meet Edith O’ Brien:

The back-office employee who has disputed Mr. Corzine’s testimony is Assistant Treasurer Edith O’Brien. She has told people that she disagrees with Mr. Corzine’s suggestion at a House subcommittee hearing in December that she provided assurance that a $200 million transfer to J.P. Morgan Chase & Co. three days before the bankruptcy-protection filing was proper, according to people familiar with the situation.

She has declined to be interviewed by a House subcommittee and the Justice Department and is seeking immunity from prosecution in exchange for cooperation, said people familiar with the matter. Ms. O’Brien, who couldn’t be reached for comment, still works for a trustee now unwinding the company.

Mr. Corzine testified that he got “assurance…from our back-office people in Chicago,” including Ms. O’Brien, that the transfer complied with all the relevant rules. The transfer was needed to cover an overdraft in an MF Global account at J.P. Morgan.

Not knowing Ms. O’ Brien or her role in this fiasco, I do give her a ton of credit for standing up and speaking out in this manner. She displays the balls that our country badly needs but sorely lacks, especially in Washington.

I strongly encourage the Department of Justice to grant her immunity so that we can learn more of what really happened at MF Global. America is sick and tired of the nonsense and bull$#&t that are all too commonly on display in the midst of the Wall Street-Washington incest. As such, I would call on Congress to hold a public hearing in which Ms. O’ Brien and Mr. Corzine are jointly called to testify.

In this corner, Jon Corzine. In that corner, Edith O’ Brien.

Let’s rumble!

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, our economy, and our political realm so that meaningful investor confidence and investor protection can be achieved.

 

  • Bill

    In that scenario of dueling testimony I can envision Corzine sitting there putting on a show of grinning and shaking his head side to side as Edith O’Brien testifies. I remember a case when an old fraud sat there in court and tried that very maneuver, which didn’t work out for him.

  • Peter S.

    I would imagine the outcome a TKO – with the first fifth in the third round.

  • Joe

    It is such a simple equation no matter how much Corzine tries to make it seem convoluted.

    They were massively levered and got margin called. We’ve seen it happen before and we will see it again.

    I laugh every time I hear about Bernanke being a student of the Depression. He must have missed the chapter on regulations imposed so the USA would be less exposed to one of these failures.

    We will learn our lesson FEAR until people convince enough people to change the rules again GREED…….

  • coe

    Let’s not forget John Rusnak and the scandal at Allfirst in Baltimore…it seems the creative will finds a way to press on to its illicit end, either with complicit support from the back office, or by duping them due to poor checks and balances – how is it possible that there are still “surprises” in trading losses even with the new tougher and more sophisticated risk management oversight…power/hubris/and misguided sense of empowerment – oh, and zero ethics!

  • DC

    I hope she absolutely buries him…

  • Francois T

    I strongly encourage the Department of Justice to grant her immunity so that we can learn more of what really happened at MF Global.

    This wish rest on the very optimistic assumption that the masters of the DOJ (a.k.a. WH) are interested in knowing the truth.

    Given their underwhelming zeal (how’s that for a polite formulation) in prosecuting financial crimes thus far, I give zero chances to a grant of immunity.

    Under the Obysmal Administration, only the whistle-blowers pay the price. Just ask Thomas Drake and James Rizen.






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