PrairiePundit

Michael Barone: Former New Jersey Sen. and Gov. Jon Corzine will not be prosecuted, the New York Post reports today. Corzine, who was CEO of Goldman Sachs in the 1990s and made something like $400 million when the firm went public, was CEO of MFGlobal, a futures and commodities trading firm which went bankrupt, with some $1.6 billion missing from customers’ accounts. Money in customer accounts belongs to customers, and it’s a crime for firms to seize customers’ money. For an unflattering view of Corzine’s private sector career and the civil case filed against him last month by the Commodity Futures Trading Commission, see this Bloomberg article by William D. Cohan, author of Money and Power : How Goldman Sachs Came to Rule the World. Cohan writes that Corzine “designed a trade that almost bankrupted the firm in 1994″ and in his book argues that Corzine was made CEO only when his predecessor abruptly resigned earlier than anyone else expected, with no process in place for selecting ...

Ed Morrissey: Has Jon Corzine escaped justice after MF Global fleeced customers of more than a billion dollars?  On CNBC, Rick Santelli and James Koutoulas say … maybe not.  If the Obama administration’s Department of Justice won’t prosecute Corzine, who not coincidentally is a big Obama bundler and a former Democratic Governor and Senator from New Jersey, then maybe states where Corzine’s former customers live might be interested in theft on the grandest scale imaginable (via  News Alert ): I’m not sure whether this will work or not. If the thefts occur within the federally-regulated trading system, state AGs might not have jurisdiction. On the other hand, New York state AGs have a long history of crackdowns on fraud within the investment community, and it will be difficult to argue that a customer robbed of his retirement money in Arizona or Florida has no recourse to bring Corzine to justice while the DoJ sits on its hands. The states can clearly prosecute for...

NY Times: Criminal Case Unlikely in Brokerage Firm’s Fall A lack of charges in the loss of about $1 billion in customer funds at MF Global is likely to create frustration. What looks on the outside like theft and embezzlement is not seen as a crime by the feds?   It is a case the State of New York could bring if it wanted too.   Corzine can use a billion dollars of customers funds, and it is not a crime.  It is interesting that he is still one of Obama's top bundlers.  But, don't worry there is probably nothing political about the Justice Department's investigation of a big Republican donor's operations in Asia either.  Really? This is a bigger scandal that Enron and the government says it can't make the case?  That is an additional scandal.

Jeffrey Carter: Came across this article on  May 29  that talks about the continuing saga of MF Global and Jon Corzine. It’s amazing that this epic financial scandal gets no consistent main stream media coverage. Over a billion was stolen. Corzine is in  Madoff  territory. Here is the proposed rule, Futures brokers would need to get approval from a top executive before making big withdrawals from customer accounts under a rule now pending and referred to in the industry as the “Corzine rule”, after MF Global’s former CEO Jon Corzine. Why is this stupid? Because it wasn’t a lack of rules that allowed Corzine to steal from customer accounts. It was a lack of ethics on the part of one person. Corzine stole the money to margin bad trades he made through his MF account. He invested in European bonds, chasing yield and seeking to make big proprietary profits for MF Global. Their earnings were under huge pressure because the operations of the company weren’t part...

NY Post Editorial: ... Team Obama has returned Corzine’s donations — but it’s still more than happy to pocket any and all cash he brings in from his friends.   Sen. Jon Tester (D-Mont.) has said “people need to go to jail” over MF Global’s collapse — but to date, no one’s even been charged.   Indeed, a new PBS documentary reports that Corzine personally lobbied regulators not to ban a strategy that allowed his firm to borrow money from customer accounts to fund trading elsewhere.    That strategy, “internal repo,” was critical to Corzine’s betting the MF farm on risky European debt.   It also appears that MF Global illegally commingled company and client funds to pay off financial obligations.   Yet Corzine is not considered a vulture.   Nor are those top execs at Mitt Romney’s old firm, Bain Capital, who’ve been pouring money into the Obama campaign and the Democratic National Committee.   Bain itself, of course, is the prime foc...

Washington Times: Bradley I. Abelow , a key figure in the collapse of brokerage house  MF Global Holdings Ltd. , has left his post as chairman of an outside board providing financial advice to the  Environmental Protection Agency  ( EPA ). The move comes months after  Mr. Abelow , chief operating officer at  MF Global , appeared before Congress  as lawmakers from both parties questioned how he and other top officials - including former New Jersey  Gov. Jon Corzine  - could not account for about $1.2 billion in customer accounts that went missing before the company’s collapse. Meanwhile,  EPA  officials have steadfastly declined to discuss  Mr. Abelow ’s continuing role chairing the advisory board months after he emerged as the public face of one of the largest bankruptcies in U.S. history. Officials never announced  Mr. Abelow ’s departure from the board, but the move recently became clear when the financial advisory b...

WSJ: Jon S. Corzine gave "direct instructions" to move $200 million from an MF Global Holdings Ltd. account containing customer funds three days before the securities firm collapsed, according to an employee email reviewed by congressional investigators.   ...  The email was not written by Corzine but it does reference him as giving authority for the transfer.   Judging by the amount involved a senior executive would have to have given authorization.  Corzine denies giving the authorization.

Washington Times: During two days of recent congressional hearings into how as much as $1.2 billion disappeared from MF Global  customer accounts, the chief operating officer of the imploding investment firm responded again and again that he did not know. Yet as the  House  and  Senate  interrogated  Bradley I. Abelow  and other top executives at  MF Global Holdings Ltd. , lawmakers did not mention  Mr. Abelow ’s role as a financial adviser for the Environmental Protection Agency , which as of Tuesday listed him as the chairman of its financial advisory board. Even as he finds himself the public face of a bankruptcy and admitted to lawmakers that he had no idea how client funds disappeared,  Congress and the administration have voiced no public concern about  Mr. Abelow ’s role advising the $8.6 billion government agency on its finances. “ EPA  relying on Wall Street for financial guidance is like the blind leading the...

CNN/Money:   After hours of testimony from ex-MF Global CEO Jon Corzine on Capitol Hill Tuesday, the head of exchange operator CME Group "tossed a bomb," as one senator put it. Terrence Duffy told lawmakers that MF Global had illegally transferred money out of customer accounts, and that Corzine himself had been aware of at least some transfers. ...  The testimony came after the company executives had finished their testimony so the senators were not able to question Corzine about his knowledge.  I am sure they will pursue the issue.

Charles Gasparino: By playing the fool in two high-profile hearings, Jon Corzine so far has been able to deftly sidestep lawmakers’ questions about the now-infamous implosion of MF Global, including the disappearance of a whopping $1.2 billion in customer money that should have been kept safe in brokerage accounts. But new questions are about to arise.   Specifically: How did Corzine manage to convince regulators that a relatively small brokerage like MF Global was ready for big-time status, both as a risk-taking hedge fund and (even more startling) as a primary dealer of US government debt — a status that only a very few firms are allowed?   The likely explanation involves Corzine’s long experience at the nexus of politics and finance — as CEO of Goldman Sachs, then US senator and New Jersey governor, and of course as a leading Obama fund-raiser. In other words, crony capitalism.   Corzine is to appear before the House Financial Services Committee’s Subcom...

Charles Gasparino: Corzine’s ‘clueless’ confession When Corzine told Congress that he had no idea what happened to over a billion dollars of customer funds, he appeared to be admitting that he and the firm failed to properly supervise and protect those customer funds.  From my own experience, keeping track of customer funds is one of the top priorities of any back office operation.  It comes way ahead of trading in the firm account.

Michael Daly: Where's the Money, Jon?   The first question I would put to him when he appears before Congress is "Who was responsible for keeping customer funds segregated from firm funds?"  The followup would be, "How did you supervise that person to make sure he was complying with his duties?"  "What reports did you review on a regular basis to determine the firm was in compliance with its obligation to secure customer funds?" There would be many more follow up questions, but the bottom line is that there should have been financial reports for management to review showing the disposition of customer funds.  Someone had to be responsible for producing the reports and management had to have someone responsible fore reviewing those reports.  It is just inconceivable that they could accidentally use customer funds to cover their own trades.

NY Times: MF Global Is Said to Have Used Customer Cash Improperly When this issue first came up I said I could think of no rational explanation for the missing customer funds.  There apparently isn't one that does not involve a violation of the law.  Apparently some of the money was used to cover losing positions taken by the firm which was under the direction of the former Democrat big wig. There is a clip of Joe Biden saying one of the first persons he would call in a financial crisis would be Corzine.  He probably would like to revise and extend those remarks.

Jonathon Tobin: As Seth  noted earlier , the collapse of former New Jersey Governor and Goldman Sachs co-chairman Jon Corzine’s latest financial venture is the end of his hopes for higher office. But it is more than that. The discovery that $700 million of the money investors put into his MF Global firm is missing is a shocking scandal that highlights liberal hypocrisy as much as it does the excesses of the world of Wall Street high finance. Corzine is not just another high-flying investment ace that was shot down by bad bets — in this case by his firm’s decision to put customers’ money in European sovereign debt. Such figures are generally associated with the fat cats whom popular culture tells us are all Republicans who finance conservative causes. Corzine was, after all, not just a Democrat but one of the party’s bright hopes just a few years ago and a leading liberal advocate for bigger government as well as, in a touch dripping with irony, for reining excessive compensati...

NY Times: MF Global , the commodities and derivatives brokerage firm run by  Jon S. Corzine , appeared to move some money out of client accounts in its brokerage unit after an audit by the  CME Group  was completed early last week, a violation of federal rules, the exchange said in a statement on Wednesday. The disclosure by CME comes as regulators continue to search for hundreds of millions of dollars still missing from MF Global’s brokerage accounts. It may also fuel suspicions that the firm moved the money in its final days, when it faced mounting demands to produce additional capital to shore up its trades. CME completed an audit of MF Global’s books around Monday or Tuesday, certifying that the brokerage firm was in compliance with rules governing segregated customer accounts. That meant that money in customers’ accounts was adequately separated from each account and from MF Global’s own money.   But it now appears that the firm transferred money out o...

Bloomberg: MF Global Holdings Ltd., under investigation by U.S. regulators after filing for bankruptcy protection, violated requirements that it keep clients’ collateral separate from its own accounts, the head of the world’s largest futures exchange said. Craig Donohue, CME Group’s chief executive officer, said on a conference call with analysts today that MF Global isn’t in compliance with the rules of the exchange and the Commodity Futures Trading Commission. “While we are unable to determine the precise scope of the firm’s violation at this time, we are investigating the circumstances of the firm’s failure,” Donohue said. MF Global, the holding company for the futures broker run by former New Jersey Governor and ex-Goldman Sachs Group Inc. Co-Chairman Jon Corzine, is being investigated by regulators for hundreds of millions of dollars that may be missing from client accounts, according to two people with knowledge of the matter. ...  From my many years experience i...