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MF Global: Independent Investigator Required…NOW

Posted by Larry Doyle on May 6, 2012 7:50 AM |

We’ve been robbed.

It is one thing to be robbed. It is a far different thing to have Uncle Sam NOT turn over every stone or reveal what they may have found in the process of investigating the robbery.

Strong charge, no doubt. Given the responses and messages I have received from people impacted by the MF Global debacle, those feelings of a lack of total support from Uncle Sam are all too real. With more than 6 months having passed from the “time of the robbery,” and with seemingly little reason to believe the case will soon be settled and customers made whole, what do we need? Where is Inspector Clouseau when we need him? That is, an independent investigator. 

Just such a call was made this week in Washington by Representative Michael Grimm (R-NY). In the spirit of full disclosure, I had inducted Representative Grimm into the Sense on Cents Hall of Shame a year ago for his efforts to gut meaningful whistleblower protections. With Grimm’s call for an independent investigator for the MF Global fiasco, I will gladly make him the first occupant of the Sense on Cents Palace of Purgatory.

Moving right along, Grimm’s call deserved greater attention but was at least highlighted by The Wall Street Journal midweek in its report, Independent Counsel for MF Global is Sought:

A Republican member of the House Financial Services Committee is pushing for the Justice Department to turn over its investigation of the MF Global Holdings Ltd. collapse to an independent counsel, according to people familiar with the matter.

Rep. Michael Grimm, a first-term House member from New York, circulated the letter Wednesday in an effort to get other legislators to sign on. He is working to get more signatures in coming days before turning over the letter to Attorney General Eric Holder, one of these people said.

The move comes about six months after the commodities brokerage firm tumbled into bankruptcy and the revelation that money was missing from customer accounts. The shortfall is estimated at about $1.6 billion.

Criminal and civil investigators have been looking into the case, but so far have said little about the progress of their investigation.

That has led some Republicans and customers of MF Global to question whether the investigation is being slowed by a desire to show deference to the firm’s former chief executive, Jon Corzine. Mr. Corzine, a former U.S. senator and governor of New Jersey, has been a prominent Democratic fund raiser and supporter of the Obama administration.

The letter circulated by Rep. Grimm’s office acknowledges that while “we have no direct evidence” that the Department of Justice “is providing special treatment…perception matters a great deal.” Still, the letter concludes that “an independent investigation is urgently needed.”

Perception? Keep your perception. The simple reality is more than 6 months have passed and countless numbers of our fellow citizens have had their lives and businesses derailed by the actions of those at MF Global.

I know I speak for so many of our citizens who feel they have been disenfranchised by the lack of real progress and meaningful results in the current MF Global investigation. I join with Representative Grimm in calling — no, rather DEMANDING — that an independent investigator take over this case.

Any suggestions as to who readers would like to see in that role?

Who might be our modern day Inspector Clouseau? Speaking of which and to add a touch of weekend levity where none exists, perhaps you may enjoy this 1 minute classic scene….

Inspector Clouseau: Does Your Dog Bite?

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.

  • Vince

    In terms of an independent investigator, an honest guy like Ed Demarco.

  • Ray


    “Righteousness exalts a nation, but sin is a disgrace to any people.” Proverbs 14:34

    Holder, some (maybe most?) politicians (read “many tics”), the banksters and crooked CEOs (note Wal-Mart’s Lee Scott in the recent mentioned Mexico bribery scandal) are all a disgrace to this country.

    What a poor example we are to the world. It is so disgusting to realize what is happening to this country. I talk to many who are saying for the first time, they would like to leave this country.

    Saw a cartoon with a Mexican official and a Wal-Mart executive squaring off with each other with both simultaneously saying at the end, “Business as usual”.

    Keep exposing the sheisters in this country that are placing it on a path to ruin.

  • Peter S.

    Let no man be beyond reproach, and let the chips fall where they may.

  • Tom

    Isn’t that what the SEC, FINRA, CFTC, Justice Department and the Treasury Departments are for? Why aren’t some of the States’ Attorneys General involved? I find it difficult to believe that the providers (Farmers), aren’t demanding this from the Market.

    • LD


      Not sure if you have visited Sense on Cents previously, but in regard to the SEC, FINRA, CFTC, et al, their inability to perform is a function of their being captured by the incestuous relationship which defines the Wall Street-Washington dynamic.

      There are LOTS of examples of this…

      Wall Street-Washington Incest

  • Tom

    @ LD. I visit your blog often. I was just saying that there should be no need for an independent investigator. We have plenty of agencies that were designed for this. I was just pointing out, with so many agencies and law enforcement, how not a single one has opened any kind of investigation. If the system is corrupt on that level of magnitude, what then?

    • LD

      Expose the incestuous relationship so the public has a greater understanding and can bring pressure to bear on elected officials…

  • Ron Larson

    Wait. Lets step back and look at the big picture for a moment.

    I think we can all agree that the federal financial regulators are compromised by Wall Street. And that would explain their inability to detect, prevent, or prosecute this failure.

    We sense that the Justice Dept. is compromised by politics. And that explains that lack of criminal prosecution for the crimes of MF global.

    So that leaves local (state) regulators and prosecutors to pick up the slack. Yet despite initial chest thumping, nothing has happened. This one has me most baffled. There are plenty of Republican state AG’s that would love have Corzine’s head mounted in their trophy case. But here we are, and not ONE has done a damn thing.

    My point is: I fail to see how a special prosecutor will make any more headway than an angry Republican state AG with ambitions. And God knows that many prosecutors with agendas don’t let facts (or lack there of) slow them down at all.

    So that leaves 3 possible explanations:
    (1) Every prosecutor and every regulator at every level is absolutely compromised by Wall Street and Politics. I really don’t think this is possible.

    (2) Every prosecutor and every regulator at every level is outclassed, and they know they will be outsmarted and outmaneuvered by MF Global and friends. They conclude that there is no upside to even trying to pretend to do their jobs. This option makes sense to me. Look at all the other recent scams that have also been untouched, such as subprime mortage CDOs, insider trading, etc., etc.

    (3) There just isn’t a case. Hard to believe. $1.7B went missing. Yet as far as we can see, none of that missing money ended up in the pockets of MF Global employees. So it wasn’t classic embezzlement where someone steals for themselves. They were just massively incompetent, which it turns out isn’t very illegal.

    If I have to vote, I have to go with #2. The cold hard fact is that Wall Street will not allow themselves to be reigned in by any power on earth. The Occupy Wall Street crowd is right. But they are a weak and pathetic attempt to do this. Wall street just laughs and their puny attempts to demand accountability.

    We need a new Teddy Roosevelt, someone with the guts and muscle to take them on and reign them in.

    • LD

      We need REAL whistle blower protections so that those with inside knowledge can come forth with total confidence that they are not risking life,limb, and the pursuit of future happiness.

      Having interacted with whistle blowers, I knwo that those concerns are all too real.

      • Ron Larson

        All of the wistleblowers in the world won’t help if the regulators and prosecutors are afraid to do anything.

        • LD

          In addition to the meaningful whistle blower protections, I also strongly believe we need a new and separate Office of Financial Regulatory Oversight which would work in close contact with the SEC’s Office of Inspector General (currently vacant, previously occupied by David Kotz) and an as yet non-existent Office of Inspector General for FINRA.

          This newly launched office would have subpoena power. I strongly believe this type of initiative is the ONLY way to unlock the regulatory capture which is currently strangling our financial regulatory system.

          Bring in Eliot Spitzer, Thomas Galvin (MA), Gary Aguirre, and David Kotz to get this effort going.

          Expose and aerate the incest.

  • Paul van Tricht

    In all the world—across the sea

    Or in the tropics—could there be

    One closed-door shady deal that lacks

    Conspirators from Goldman Sachs?

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