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MF Global: Spreading the Blame Around

Posted by Larry Doyle on December 4, 2012 9:46 AM |

I have tarred and feathered Jon Corzine sufficiently over the course of the last year for the debacle that unfolded on his watch at MF Global.

On that note, I welcome reading this morning that some tar and feathers are being applied to others who should have been in a position to stop the excessive leverage which brought down the MF Global house.

Who were these other individuals and entities? Let’s navigate as The Hill addresses a topic which many in Washington and on Wall Street would like to keep conveniently under the rug.

The Hill writes on a House Democrat report released just yesterday, Corzine Not Only to Blame for MF Global Collapse,

Republicans were wrong to lay blame for the high-profile collapse of MF Global primarily at the feet of its former head, Jon Corzine, according to a report from House Democrats released Monday.

Rather, there are plenty of people who share the blame for the futures firm’s collapse, including MF Global’s board and financial regulators, Democrats claim in their dissection of the bankruptcy that left more than $1 billion in customer funds missing.

(Who was that regulator? The WSJ indicates it was FINRA in a writeup released this morning, MF Global ‘Blatantly Misled’ Regulator.)

The report comes from Rep. Michael Capuano (D-Mass.), the ranking member of the Oversight subcommittee of the House Financial Services Committee. Capuano failed to sign on to a report issued in November by Republicans on the panel, saying he did not have enough time to review its findings and some of the points required initial commentary.

Capuano agreed that Corzine was partly to blame, but argued that the GOP’s findings overshot the mark.

“A reasonable person could read the majority staff report and conclude that Corzine was solely responsible for MF Global’s collapse and the loss of customer funds,” the addendum stated.

Capuano argued that the firm’s board bears a “significant share” of the responsibility by approving Corzine’s actions and setting risk parameters. Furthermore, he contends that no person could have done what Corzine did if rules had been tighter and enforcement more stringent.

Does this all sound like a broken record to you? No doubt. What is the tune that continues to play on and on to the point that Americans have become numbed to the repetitive and monotonous noise?

Self-regulation does not work on Wall Street.

Does anybody think differently?

Navigate accordingly.

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 so that investor confidence and investor protection can be achieved.

  • Peter Scannell

    “Another goal of potential regulatory action, Mr. Capuano said, is for MF Global to serve as a warning to other firms.”We want to make clear that you don’t lie to Finra and make sure Finra has rules that make it tough for firms to lie to them,” he said.”

    I was under the impression that lying to regulators would be considered perjury, obstructing justice, and aiding and abetting securities fraud.

    And yes, board directors certainly matter!

    • Peter Scannell

      Especially when they aid and abet fraud, would you agree “Chuck?”

  • Virginia

    I hate to be the one to tell you this – but Republicans eat their own… Dems rub them out…

    Independents are better off sitting on the fence, yeah?

    • Peter Scannell

      I think it is very prudent of Rep. Michael Capuano to pursue all those whose dereliction and/or duplicity aided and abetted the fraud. Good for the Congressman!

      • Peter Scannell

        Just say No to SROs

  • Rick

    how much you wanna bet that Capuano got from someone close to Corzine, some sort of campaign contribution or personal perk that reflected their desire to see true justice done and our constitution defended…?

    He’s thinking of running for Senator if Kerry gets appointed….a real turd…

    and Corzine, if there were really justice, would be playing pinnochle with Madoff right now…what’s the difference between those two..?

    Where’s that white collar prosecutor when you need him…?

    They could play bridge if Jimmy Cayne joined them…never happen.

  • Richard Feinberg

    Clearly the CCO and the CFO were asleep at the switch. Daily capital computations (if they were done) showed days and weeks before the bankruptcy that MF Global’s capital was less than twenty per cent more than the required net capital. At that point it is the responsibility of the broker/dealer to send telegraphic notice to the S.E.C. and the registrant’s SRO that that barrier has been breached. Did MF send such notice, and if they sent such notice, to whom? Did the recipient do anything? The story has yet to unfold about the response(s) of the regulators.

  • http://www.zethics.com Mark

    “Capuano… contends that no person could have done what Corzine did if rules had been tighter and enforcement more stringent.”

    On Thursday, November 29, Congressman Barney Frank and Congressman Mike Capuano introduced legislation which would merge the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

    “This is a common sense step in continuing to advance financial regulatory reform. Merging the SEC and the CFTC will consolidate the existing regulators to eliminate gaps that have put our financial system at risk,” stated Congressman Mike Capuano. Capuano is the Ranking Member of the Subcommittee on Oversight and Investigations of the House Financial Services Committee.

    JPMorgan CEO Jamie Dimon testified at a U.S. Senate Banking Committee hearing in June that the Dodd-Frank law has not solved problems facing Wall Street, but instead has created a confusing new regulatory system for banks. “What we set up is a system with more and more regulators. We don’t actually know who has jurisdiction over many of the issues we are dealing with anymore. I would prefer a simple, clean, strong regulatory system, with real intelligent design, but that’s not what we did.”

    Is the Frank-Capuano bill good for investors?

  • LD

    Mark,

    My personal take is that we do not necessarily need more and more regulators and more and more regulations.

    Let’s start the process with real regulators unencumbered to perform and held accountable. How to make that happen?

    Fewer and fewer pols and revolving doors between Wall Street and Washington.

    Then we can get back to Dimon, Frank, and Capuano.






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