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MF Global: “This Was a Massive Theft”

Posted by Larry Doyle on April 30, 2012 7:56 AM |

Six months and counting.

The lives of countless numbers of families and individuals are likely forever changed by what transpired at MF Global. Yet there remains no real accounting nor full retribution for the fiasco which unfolded within the walls of the firm that traced its roots to the late 1700s.

Certainly we can expect that trustees and regulators will put forth some thousand page reports trying to detail the minute by minute demise of MF Global. Do you think those reports will mean anything to the lives of the people impacted? I don’t. Why? How do you recapture trust? When there is NO real trust, there is NO real justice, and NO real closure. It is that simple.

Who in America would not agree right now to grant Edith O’Brien, the junior executive in MF Global’s back office, full and total immunity so we may learn even more details about this travesty? Where is the pressure in Washington to make that happen? By not granting Ms. O’Brien immunity, our supposed political leaders have shown their true colors — and they are NOT red, white , and blue.

Utilizing the language of “the street”, what do those in the Chicago trading pits think happened at MF Global? As so succinctly stated in today’s Financial Times article, MF Global Leaves Industry Scarred:

John Roe, leader of the Commodity Customer Coalition, a customer group, and an introducing broker at BT Trading in Chicago, a firm that had all $15m or so of its client funds at MF Global, says his members would be “beyond dejected” if there were no prosecution. “There should be a criminal consequence,” he says. “The system itself is at risk if there isn’t.”

“Someone at MF Global made the decision to swipe customer money,” Mr Roe adds. “They need to pay a price for that. Otherwise, our members will feel the marketplace isn’t what they thought it was.”

“This was a massive theft,” says Jeff Carter, a Chicago futures trader and blogger. “The futures industry battles the equity industry for dollars. Brokers compete against each other. If I am a customer and have a choice between trading crude oil futures or a crude oil ETF, the equity broker has a huge leg up against the futures broker if no one from MF stands trial – specifically, top management.”

Juxtapose the comments of Mr. Roe and Mr. Carter to the comment I highlighted yesterday by Harvard professor Niall Ferguson:

When countries improve rule of law, property rights, and investor protections, and when regulation becomes more transparent and corruption reduced, there are major payoffs. The World Justice Project says the U.S. has been deteriorating for close to 10 years by all these measures…

I repeat, why no immunity for Ms. O’Brien? Let this be the legacy of those in Washington who would cast their lots with the likes of Jon Corzine and others rather than standing up for Mr. Roe, Mr. Carter, and the American public at large.

Without making light of it, this entire MF Global scenario reminds me of another Chicago caper in which those disguised as the Feds were also shown to be part of the “the sting”. While the clip below may provide a little bit of entertainment value, regrettably the pain experienced by many of our fellow citizens is all too real.

Can somebody explain to me again why Ms. O’Brien is not granted immunity?

In the meantime, let’s go back to the mid ’70s and enjoy this classic scene. Too bad the MF Global mess was not only a movie, as well.

Larry Doyle 

Isn’t it time to subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook?

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 so that investor confidence and investor protection can be achieved.

  • Peter S.

    “There should be a criminal consequence,” he says. “The system itself is at risk if there isn’t.”

    Spot on!

  • http://www.abrahamcta.com Andrew Abraham

    Great post. Very sad state of justice in the US. I do not know why Romney has not picked up on this?

    • Peter S.

      why in the world would you think Romney would run with this?

  • Ken Brodeur

    People comment that the Federal Reserve Banking system is a failure. It is not, it is a scam, a con like the climax of the movie “The Sting” that you have shown.

    People move from working in the Federal Reserve to high government office like moving from the bedroom to the kitchen, and back. MF Global and Goldman Sach are also part and parcel along with the mainstream media of this scam.

    Financial wizardry serves only the financial wizards, Glass-Steagle Act should come back, futures contracts should only be granted to those accepting delivery and governments should create money, interest free, and spent into their own economies for the benefit of all their people.

    There is no reason, what so ever, even if you want war, to borrow money as a nation.
    This is the true insanity of our time and it will surely end, good if we recognize this, bad if we don’t.

    • John Halsey

      Ken-right on. If you have not read a book entitled THE CREATURE FROM JEKYLL ISLAND I highly recommend it. It is essentially the history of the Fed from its origins till now. LD-you will love it to. David Zervos is the one who recommended it to me. Unfortunately not on Kindle yet (Or wasn’t when I bought). For cynics like me it was a very good read. I too am surprised Romney hasn’t teed this issue up.

      • Obsvr-1

        absolutely a must read for everyone, it is a difficult read (much like a history text book).

        The book does a great job of describing the FED, its historical roots and the pattern of boom/bust/bailout that sheds light on the political and money elite gaming of the monetary and banking systems.

  • Ed

    Mr. Doyle,

    I really appreciate all the articles you post, just used this latest MF Global commentary to write letters to my two senators and US Rep on the issue. As a long time retail futures trader I am really concerned.

    Keep up the great work.

  • Vince

    Edith O’Brien is not a junior back officer person. Assume for the moment that she falsely and corruptly assured Corzine that the transfer was legal.

    IF YOU GIVE HER IMMUNITY EVERYONE WALKS

    • LD

      Vince,

      It has been 6 months. Ms. O’ Brien has already given a strong hint that she has provided testimony that is contradictory to Mr. Corzine’s. If you do not believe Ms. O’ Brien should be granted immunity, then surely she should be indicted, no?

      One or the other. Although who do you think had the motivation both to approve the transfers and then to feign ignorance about them?

      Come on now!!

  • Ron Larson

    Wrong, wrong, wrong.
    How about this? Go ahead and prosecute Ms. O’Brien to the full extent of the law. After all, she seems to be the one who actually took the money out of the customers accounts.

    Now, after she is looking at spending the rest of her life in jail, then she can start singing.

    Has criminal prosecution gotten this bad now? She took the money. What the hell more do they need?

    • LD

      Ron,

      Now why might Ms. O’Brien be so concerned? Think she is looking at the fact that JC has lot of friends in very high places? Who knows, maybe the powers that be told her to take the 5th knowing all too well that no indictments were going to be handed down.

      I think we can all agree that something here SMELLS very bad.

      • Ron Larson

        It is not enough to just go after the ring leaders. The staff also need to know that if they knowingly break laws and regulations, they too will be prosecuted. Then perhaps when the next JC tells his bookkeeper to embezzle funds, the bookkeeper will instead report it to regulators, or quit, or both.

    • Ron Larson

      Let me add that Ms. O’Brien is no simple clerk. She was in charge of the money. It was her job to protect it. She stole it. If JC told her to steal it for the company, then she should have (a) said “no”, (b) quit, and (c) told the regulators what was up. Heck, she is on record bragging about what good controls MFG had in place to protect the accounts.

      I know everyone wants JC’s head. But as far as I can tell, he never put a gun to her head and forced her to press the “transfer” button. I think she knew exactly what she was doing.

      So start with her… NOW! Why is she still walking the streets (probably with a passport so she can flee).

    • Hey You

      The “I was only following orders” plea didn’t work during the Nuremberg trials. Should they work now?

  • LD

    She did not sign the documents from JPM as requested.

    What more do you need to know?

    • Ron Larson

      She moved the money out of the customer accounts. Who cares what she did after that? Sorry, I’m not impressed that she found her scruples afterwards. Like I said earlier, she pressed the button. This “I was just following orders” isn’t good enough. She knew what she was doing was wrong. That is why she didn’t sign the paper. She just have not done it in the first place.

  • Patricia

    As long as the fox remains in charge of the hen house — it seems to have become ‘business as usual.’ Without trust where will the investments needed to grow the economy come from — placing our economy in great peril.

  • Bill

    LD, that photo you have with this post tells it all.

  • Russ

    Larry,

    I guess I don’t need to add my amateur answer to why Ms. O’Brien isn’t granted immunity….because it would take down Obama’s boy and put him in jail where he belongs.

    This entire country has come to turn on whatever is politically expeditious for Obama.

    In my opinion, the only thing that will save the United States of America is if ALL campaign contributions (and I mean ALL) to politicians are outlawed. Instead of paying FCC licensing fees, media outlets should be obliged to offer each party X amount of air time and all politicians should be required to compete against each other based on their ideas, rather than their pocketbooks. How can large campaign contributions NOT have an effect on legislation and crony capitalism…..?

    MF Global is as big a black eye as Madoff and Stanford.

    It’s funny how the bigger the fraudster, the smaller the chance that he gets significant punishment.

    • Hey You

      Hasn’t it always ben this way?

      This MF Global fraud is not very big time compared to arranging the USA’s entrances into multitudes of wars. The USA was setup to escape oppression by the well connected, but that hardly lasted more than a few decades.

  • Cheyenne

    Rule of law, you say?

    You must’ve missed the memo from the 1% announcing the reinstatement of the Divine Right of Kings. Hail, Corzine! Hail, Dimon!

  • D. Graham

    Maybe the Pasadena Police can help Eric Holder. Apparently, they can find someone who steals from the girl scouts. Yes, Eric, it is okay to arrest people.

    putz

  • gary miller

    As I understand it. As vile as this is, no law was acually broken. Using client money for propriatary investments, called ‘Hypothication’ is allowed, although not advertised of coarse. This is why no one is acountable. Obama said, technically they broke no laws.

    • LD

      Gary,

      To the best of my knowledge, the money can be “temporarily” utilized but needs to be fully and properly accounted for and returned to the customer accounts.

      How did the “fully”, “properly”, and “returned” components work? And why didn’t Ms. O’Brien sign the document requested by JP Morgan indicating that the funds being delivered were NOT customer funds.

      Do you believe everything the President or AG Holder say?

    • Obsvr-1

      one would be better off NOT believing anything Obama / Holder says, until proven otherwise.

  • major

    We are descending into a new dark age. The raping and pillaging has accelarated since Obama took office. This is the plundering of America followed by the conquest and subjugation of America. Infiltrating America with illegals is not about humanitarianism but about weakening the moral solidarity of America using outsiders who dont care about the Constitution.

    Many leaders in Washington mouthing numerous worthless platitudes have sold us out years ago. We will know them by their deeds not words, in this case evil.

    Can this takeover from within be stopped now? Not without an f’ing miracle.

    • Obsvr-1

      yep, 4 years ago America was duped into believing Obama was about hope and change, transparency and disrupt the business as usual attitude in Washington….

      Instead all we got is this Obama-Nation.

  • John

    Obama and the two idiots before him all work for the same masters. I learned the answer to Wall Street thievery a long time ago during the middle 90′s: INVEST YOUR MONEY in hard assets and store it on your own property or invest in your local communities away from the matchstick men! That said, I have the deepest sympathy for MF Global clients and it is my hope that their money will be returned via a civil lawsuit sometime in the future. It this brazen theft? Yup. Will Obama or AG Holder do anything about it? Nope. So sorry, but JP Morgan needed all that customer bullion and cash to pay their bonuses and cover their bad trades you see.

  • Richard Stump

    The “war on drugs” used “regulations” to change a “licensing Law”, *841(a) Except as authorized by this subchapter, it shall be unlawful for ANY PERSON to manufacture, etc” into a criminal “law”(judicial decision), to make “felons” out of “Every person” licensed by the Attorney General =(M.D.s) from 1970 til NOW. 100,000 Watergates, as the U.S. AGs violated *846 to commit “Fraud upon the “Courts” of this Nation, in ALL millions of cases!

  • Richard Stump

    The debacle in “Law” is fully reflected in “Finance”, see Jykell Isle theft of 1913-2012. All “Gold’ is absent from Ft. Knox. “Oath Mockers” Like Sen Lugar, have the nerve to run for re-election, along with his “A-Soul Mates” the Siamesian-2-Party Oath Mockers and Pied Piper Obama-fake SSN-muslimbabtistzionista. Jim Webb and Ron Paul is a ticket that would indict the 100,000- (+) thieves Otherwise I will, after being elected by a Tsunami of irate Natives??

  • rolf

    bring back the OTTOMAN EMPIRE

  • Edward Ulysses Cate

    So they used a briefcase instead of a gun, they’re still financial socialpaths that should never be trusted again with OPM. They should be written up on a nation-wide list as they’re even worse than sexual predators. At least the predators are one victim at a time, not thousands or millions.






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