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James Koutoulas: JP Morgan Insult Added to MF Global Injury

Posted by Larry Doyle on March 12, 2012 8:24 AM |

Going on five full months and with MF Global customers still waiting for a glimmer of justice on the horizon—and the return of THEIR money—we awake to read that CME executives believe no further regulation could have prevented the debacle that is MF Global.

Why is that?

Most rational and ordinary Americans already sense those running the show at MF Global ‘broke the rules’. CME executives now seemingly maintain as much as well.

Let’s give these CME execs a gold star for a tremendous grasp of the obvious. Let’s also quickly review The Wall Street Journal story and then a further fascinating story highlighting what happened to somebody in the arena who spoke out on this debacle. 

The Wall Street Journal writes today, MF Global Case Rattles World of Futures:

MF Global’s rapid demise appears to have broken deep-seated confidence in the market that allowed the industry to move beyond the trading of corn and soybean futures and become a multitrillion dollar business, with contracts used by high-speed trading firms that provide liquidity in stock markets, as well as banks aiming to shield themselves against shifting interest rates.

“It’s going to be a long time before that trust is rebuilt,” said Chris Hehmeyer, chief executive of trading firm HTG Capital Partners and chairman of the National Futures Association, the industry-backed regulatory body.

No doubt about that. A looooooooooooooooong time.

Industry-backed committees formed in recent months have weighed a range of fixes, such as streamlining the process for customers to switch clearing firms and a requirement for brokerage executives to sign off on major transfers of customer funds. Others have backed a new, independent repository to hold the capital customers used to trade futures.

There is concern, though, that none of the measures would go far enough.

Executives of CME Group Inc., the exchange operator that presided over MF Global’s operations in life and after its collapse, have said it was unlikely that any regulation could have prevented the debacle since MF Global allegedly broke customer-protection rules already on the books.

What is supposed to happen when people break rules? How about a pursuit of justice both civilly and criminally?

The people in America get this. Where are the indictments?

While we wait for real justice to be dispensed to those inside MF Global, let’s review how one individual outside the firm ‘in the arena’ who is courageous enough to speak out on behalf of MF Global customers has been treated.

High five to Zero Hedge for running a Guest Post: An Open Letter to Jamie Dimon:

Personally, I was proud to be a JPMorgan customer and proudly listed in our offering documents that our firm’s operational capital was safely held with your institution. I enjoyed great relationships with both your hedge fund/commercial banking division and your newly resurgent futures prime brokerage group. We were even on good terms with your private bank.

Then, the MF Global bankruptcy happened. And, I became aware of your bank’s involvement with the firm’s collapse. How the New York Times reports that JPMorgan received 325M in segregated customer funds despite the fact that JPMorgan Chase was a primary custodian for them. Then, JPMorgan Chase reportedly failed to return the funds when MF Global reported that they erroneously transferred customer assets and went a step further into “CYA” mode by requesting a comfort letter indicating that JPMorgan Chase had not received customer funds. JPMorgan Chase reportedly did not receive this letter, yet still, it kept customers’ property.

Through my role as the co-founder of the Commodity Customer Coalition and pro bono counsel for some 8,000+ customers whose property it looks like your institution may be holding without their consent, I have loudly advocated for JPMorgan Chase to return this property. In response to this, rather than doing the right thing, you closed all of my personal and corporate bank accounts and my personal credit card. I have been told by multiple members of the media that JPMorgan Chase has called them and stated that if their media outlet has me on television again, that JPMorgan Chase will pull their advertising from the offending network.

These bully tactics have only strengthened my resolve to protect my clients whom you have knowingly wronged and continue to wrong by improperly holding their property.

James L. Koutoulas, Esq.
President, Commodity Customer Coalition
CEO, Typhon Capital Management


While America waits and waits and waits and waits for real justice in the MF Global fiasco, Mr. Koutoulas received a swift and sudden form of justice from those at JP Morgan for daring to speak out.

Welcome to the world of Wall Street-Washington Incest as we know it circa 2012.

Navigate accordingly.

What do you think about this? Are you surprised? Does anything surprise you anymore?

Thoughts and comments welcomed and appreciated.

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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.

Larry Doyle


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