MF Global.......

[Thailandnotes]

Re: MF Global.......

Corzine set to testify.

Can someone turn the following WaPo paragraph into a haiku?

"MF Global bet on European debt using deals known as repurchase transactions or “repos,” which essentially involved borrowing the money to buy the bonds and then putting them up as collateral for the loans."

[don]

Re: MF Global.......

Jesse testifies first . . .

08 December 2011

Corzine To Take the 'CEO Defense' - The Great Wall Street Re-Hypothecation Scheme

Yes I was highly paid.

Yes I signed a statement saying I had reviewed all the financials in keeping with my fiduciary responsibilities.

Yes I am a former Chairman of the investment bank Goldman Sachs and understand the financial industry intimately.

But...

I Know Nothing!

Jon Corzine's Opening Statement

And I am sorry something happened that I did not know about.

"Recognizing the enormous impact on many peoples’ lives resulting from the events surrounding the MF Global bankruptcy, I appear at today’s hearing with great sadness. My sadness, of course, pales in comparison to the losses and hardships that customers, employees and investors have suffered as a result of MF Global’s bankruptcy. Their plight weighs on my mind every day – every hour. And, as the chief executive officer of MF Global at the time of its bankruptcy, I apologize to all those affected."

I am a former US Senator and am therefore untouchable. So, after the Congressmen are done uselessly yelling at me for the benefit of their constituents, can I go home with my money?

Commingling of customer funds and accounts a sacred trust? Hah! In the age of globalization, you just take your activity to a favorable jurisdiction.

Read this: MF Global and the great Wall St re-hypothecation scandal

"With weak collateral rules and a level of leverage that would make Archimedes tremble, firms have been piling into re-hypothecation activity with startling abandon. A review of filings reveals a staggering level of activity in what may be the world’s largest ever credit bubble.

Engaging in hyper-hypothecation have been Goldman Sachs ($28.17 billion re-hypothecated in 2011), Canadian Imperial Bank of Commerce (re-pledged $72 billion in client assets), Royal Bank of Canada (re-pledged $53.8 billion of $126.7 billion available for re-pledging), Oppenheimer Holdings ($15.3 million), Credit Suisse (CHF 332 billion), Knight Capital Group ($1.17 billion),Interactive Brokers ($14.5 billion), Wells Fargo ($19.6 billion), JP Morgan($546.2 billion) and Morgan Stanley ($410 billion).

Nor is lending confined to between banks. Intra-bank re-hypothecation is also possible as evidenced by filings from Wells Fargo. According to disclosures from Wachovia Preferred Funding Corp, its parent, Wells Fargo, acts as collateral custodian and has the right to re-hypothecate and use around $170 million of assets posted as collateral.

The volume and level of re-hypothecation suggests a frightening alternative hypothesis for the current liquidity crisis being experienced by banks and for why regulators around the world decided to step in to prop up the markets recently. To date, reports have been focused on how Eurozone default concerns were provoking fear in the markets and causing liquidity to dry up.

Most have been focused on how a Eurozone default would result in huge losses in Eurozone bonds being felt across the world’s banks. However, re-hypothecation suggests an even greater fear. Considering that re-hypothecation may have increased the financial footprint of Eurozone bonds by at least four fold then a Eurozone sovereign default could be apocalyptic.

U.S. banks direct holding of sovereign debt is hardly negligible. According to the Bank for International Settlements (BIS), U.S. banks hold $181 billion in the sovereign debt of Greece, Ireland, Italy, Portugal and Spain. If we factor in off-balance sheet transactions such as re-hypothecations and repos, then the picture becomes frightening."

With regard to former Senator Corzine and MF Global, I suspect that the truth and justice will be thoroughly swallowed by the credibility trap.

Under Hank Paulson The Fix Was In - Crudele

As I said at the time, when firms turn in 'perfect trading records' you know that they are gaming the system somewhere, exploiting some advantage.

If you think that your Wall Street funds are safe, you are kidding yourself. If you think you are safe in bullion, but do not own it and know exactly where it is, you don't have it. You may own a claim to something, and will stand in line and take what you are given like the MF Global customers when your time comes.

What will it take for people to realize that what is happening to 'the other guy' will happen to them too?

Former SEC Chairman Harvey Pitt was just commenting that the rules do not matter if the people running the financial firms do not have basic character and integrity and honesty. Of course it does not work voluntarily. Self-regulation is a joke to sociopaths and psychopaths.

And, Harvey, it does matter that they are never PROSECUTED for their crimes, and given punishments greater than a slap on the wrist. Of course the law does not matter if it is not enforced. As a former SEC Chairman you should know.

http://jessescrossroadscafe.blogspot...o-defense.html

[don]

Re: MF Global.......

Do you think you own that gold you have in storage?

Maybe, maybe not.

This is nothing compared to what will happen in the event of a major default.

Jesse

Bloomberg
HSBC Sues MF Global Brokerage Over 20 Bars of Gold, Silver on Deposit
By Linda Sandler and Tiffany Kary
Dec 9, 2011 3:24 PM ET

HSBC Holdings Plc (HSBA) sued the MF Global Inc. brokerage trustee to establish whether he or another person is the rightful owner of gold bars worth about $850,000 and silver bars underlying contracts between the brokerage and a client.

Five gold bars and 15 silver bars underlie eight Comex contracts between the brokerage and its client Jason Fane of Ithaca, New York, London-based HSBC said in a court filing yesterday. Both parties have asserted claims to the bars, creating difficulties for HSBC, which is storing them, the bank said. HSBC asked a judge to decide who the rightful owner is.

“HSBC has received conflicting instructions regarding ownership and disposition of the property,” it said. “Accordingly, HSBC is exposed to multiple liabilities with respect to the disposition of the properties.”

Bullion is selling for about $1,717 an ounce on the Comex in New York, up about 21 percent this year, as investors bought the metal to protect their wealth from Europe’s escalating debt crisis, and reached a record $1,923.70 in September. Treasuries returned 9.3 percent, a Bank of America Corp. index shows.

‘Bars Are Mine’
“These bars are mine,” Fane said in an e-mail today. “We had a letter from HSBC that they were on the loading dock to be shipped to our warehouse contractor when there was some action taken by a third party to stop or delay shipment.”

The trustee, James Giddens, expects this “relatively minor and not unusual dispute” to be successfully resolved, his spokesman, Kent Jarrell, said in an e-mail.

Fane wrote HSBC after the bankruptcy, asking the bank to transfer the bars to his account at Brink’s, according to a copy of his letter filed in court. The trustee wrote HSBC saying the gold and silver was “customer property,” and the bank shouldn’t turn it over to Fane, HSBC said in the filing. Brink’s provides vaults and other services for the safekeeping of valuables.

The judge handling the bankruptcy said today that in January he would address the matter of distributing physical goods, such as gold and silver bars, after lawyers for some customers said they couldn’t get their share of the payouts because bars can’t be broken into pieces.

According to Fane’s letter, the five Comex gold contracts are for an average of 99 ounces of each....

[don]

Re: MF Global.......

Nomi Prins

[don]

Re: MF Global.......

Leah McGrath Goodman (2nd half)

[doom&gloom]

Re: MF Global.......

Jessie has an excellent post on how even WAREHOUSE RECIEPTS are under attack to the benefit of the banksters...

http://jessescrossroadscafe.blogspot...-customer.html

The bottom line is that apparently some warehouses and bullion dealers are not a
safe place to store your gold and silver, even if you hold a specific warehouse
receipt. In an oligarchy, private ownership is merely a concept, subject to
interpretation and confiscation.

Although the details and the individual
perpetrators are yet to be disclosed, what is now painfully clear is that the
CFTC and CME regulated futures system is defaulting on its obligations. This
did not even happen in the big failures like Lehman and Bear Sterns in which
the customer accounts were kept whole and transferred before the liquidation
process.

Obviously holding unallocated gold and silver in a
fractional reserve scheme is subject to much more counterparty risk than many
might have previously admitted. If a major bullion bank were to declare
bankruptcy or a major exchange a default, how would it affect you? Do you think
your property claims would be protected based on what you have seen this
year?

You always have counter-party risk if you hold gold and silver
through another party, even if they are a Primary Dealer of the Federal
Reserve. As Ben said, the Fed offers no seal of approval.

If a Bankruptcy Trustee can pool your bullion into the rest of the paper assets and
then liquidate it at prices that are being front run by the Street, you will
have to accept whatever paper settlement that they give you.

The customer money and bullion assets are not lost, or
rehypothecated or anything else. This is a pseudo-legal fig leaf, a
convenient rationalization.

The customer assets were
stolen, and given to at least one major financial institution by MF
Global to satisfy an 11th hour margin call in the week of their bankruptcy,
even as MF Global was paying bonuses to its London employees.

*snip*

[don]

Re: MF Global.......

in the context of the above . . .

Picture the scene: It’s the end of January 2012 and already it is clear the year to come will make that which has just passed seem something of a picnic. The last strains of Auld Lang Syne had barely faded before Greece defaulted on its debts. Over the next few weeks, Italy and Spain will follow.

Across Britain and the Continent, bank after bank goes down, a domino effect exacerbated by panicking customers desperately withdrawing their savings. Where three years ago the giants of High Street banking were seen as too big too fail, now they are too big and too many for any Government to save.

Panic ensues. Within hours, the cashpoints are empty of money and the supermarket shelves stripped bare.

To make matters worse the country is hit by freezing weather. As temperatures plummet and snow falls, the road network stalls to a grinding halt, while large swathes of the country are hit by electricity blackouts.

The warning by economists that Britain is just ‘nine meals from anarchy’ is brutally borne out. Unlike last summer, the rioters on the streets aren’t looking for trainers and flat-screen TVs — just food.

An absurd fantasy? Perhaps so, but in an increasingly uncertain world, such a scenario can no longer be dismissed out of hand. And strange as it may seem, it’s one that many believe is worth preparing for.

Across the country, steps are being taken to cope with such a situation. But not by central or local government. Their contingency planning for such an emergency is focused on the most important and most vulnerable in society.

Instead it is ordinary people who are taking action: stockpiling their larders with non-perishable food, buying water-purifying pumps and camping stoves.

While five years ago such behaviour might have been dismissed as the activities of ‘end-of-the-world’ eccentrics, those doing so today are professionals from every walk of life.

my husband, a FIRE-man of note, has plenty of digital wealth but I told him, it's what's on your plate at suppertime that counts . . .

Companies selling freeze-dried food rations, sealed in giant air-tight multi-serving tins and with a shelf-life of 25 years, have seen sales soar in recent months — increasing ten-fold compared to previous years.

Most popular are the packs of instant meals that will keep a family of four going for three months once water is added. At around £1,500 they are not cheap. But many of those buying these emergency rations see them as a wise investment — and they are well-placed to make such a judgment.

‘It is not “crazies” buying this,’ says James Blake, whose company Emergency Food Storage specialises in freeze-dried foods. ‘We get a lot of high-powered business people as customers. Most people buy insurance for their health, their house or their life — this is food insurance.

‘Of course, we hope it never happens, but if there is a major catastrophe, then money is not going to be worth much after a couple of days. It will be food that becomes the most needed thing.’

Dave Hannah and his company B-Prep sell similar products. He says a number of his customers are bankers. Their average spend is £3,000.

‘It makes you think: “What do they know?” ’ says Hannah. ‘When we’ve talked on the phone, they’ve told me: “This whole thing is going to go down.” ’

Having a sense of perspective on the potential risks is something emphasised by Tim Lang, Professor of Food Policy at City University London. The highly respected academic says that while the danger of widespread food shortages should not be exaggerated, he was not surprised that people are starting to prepare for that eventuality.

‘This is a sign of the times — the tectonic plates of capitalism are wobbling pretty seriously,’ he says.

‘The general attitude in the country is: “Oh my goodness, this is not about others, it is about us, too.” People are feeling agitated and threatened and nervous.

‘There is a mass psychology of insecurity at the moment and I think that is worrying. Quietly, but inexorably, the problem of food security has entered into the mass consciousness.’

Time's Man-of-the-Year 2012

http://www.dailymail.co.uk/news/arti...=feeds-newsxml

[don]

Re: MF Global.......

Gerald Celente, if you like him . . .

[don]

Re: MF Global.......

Obama Returns $70,000 in Corzine Donations

By Hans Nichols - Dec 24, 2011

President Barack Obama’s re-election campaign returned campaign contributions from Jon S. Corzine, former chairman and chief executive officer of MF Global Holdings Ltd., according to a Democratic official.

Obama for America and the Democratic National Committee refunded the money from the former New Jersey governor out of an abundance of caution, said the official, who requested anonymity. Republicans have criticized the president for keeping contributions from the head of a firm that collapsed and filed for bankruptcy.

Corzine, 64, and his wife, Sharon Elghanayan, each contributed $30,800 to the Democratic National Committee and $5,000 to Obama’s campaign, the maximum amounts that individuals are allowed to give, said the official. Corzine, who testified before a congressional panel about MF Global’s bankruptcy and $1.2 billion in missing customer funds, has been one of Obama’s top fundraisers this election cycle. In April, Corzine hosted a fundraiser for Obama at his Manhattan home.

Corzine was one of 41 donors who bundled more than $500,000 this year for Obama’s re-election effort, according to documents released by the campaign Oct. 14. So-called bundlers arrange for contributions from other people and funnel the money to campaigns.

Bundled Contributions

Obama’s campaign doesn’t plan to return those bundled donations and will evaluate other contributions from MF Global employees on a case-by-case basis, according to the Democratic official.

Over the past 20 years, Corzine, along with his first and second wives, directly contributed $917,000 to Democratic committees and candidates, according to the Center for Responsive Politics in Washington, which tracks political giving.

“While he returned the money after enormous political pressure, this still doesn’t change the fact that Corzine was the architect of the failed stimulus project,” said Sean Spicer, a spokesman for the Republican National Committee. “If this was anything more than a political PR stunt, he would give back the full $500,000 that Corzine bundled from Wall Street.”

Steven Goldberg, a spokesman for Corzine, didn’t have an immediate comment.

To contact the reporter on this story: Hans Nichols in Washington at hnichols2@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

[tastymannatees]

Re: MF Global.......

Can someone who really knows advise us about the safety of brokerage firms.
What can and can't a brokerage do with the cash and securities in a customer's account?
Are there more reputable firms than others?
Is there a difference between owning a money market fund, and having a cash account?

As we reach the end game, I think what has passed for legalese is going to me more and more important.

I have shares of GTU at my brokerage. Are they safe? are they being loaned out behind my back so if a counterparty
fails, they won't be put back. If this is the case should I take physical possesion of the stock certificates and
put them in a safe deposit box? Do physical certs even exist anymore?

Engaging in hyper-hypothecation have been Goldman Sachs ($28.17 billion re-hypothecated in 2011), Canadian Imperial Bank of Commerce (re-pledged $72 billion in client assets), Royal Bank of Canada (re-pledged $53.8 billion of $126.7 billion available for re-pledging), Oppenheimer Holdings ($15.3 million), Credit Suisse (CHF 332 billion), Knight Capital Group ($1.17 billion),Interactive Brokers ($14.5 billion), Wells Fargo ($19.6 billion), JP Morgan($546.2 billion) and Morgan Stanley ($410 billion).

Good question, I believe the Canadian Imperial Bank of Commerce is where GTU stores it's bullion So if CIBC has a problem of insolvency what are the Canadian Banking/bankruptcy/security laws regarding those types of deposits?? So now the wall of worry not only includes your broker but the bank where the gold is stored along with any potential government confiscation.

LOL, paranoia is a way of life for me these days

[don]

Re: MF Global.......

Speculator speculation . . .

Did Bankers Deliberately Crash MF Global to Crash Gold and Silver Prices?

Did bankers use the MF Global to suppress gold and silver prices and create the panicked appearance of collapsing precious metals to give themselves additional precious time to delay the crash of the Euro and the US Dollar? As crazy as this sounds, a closer investigation of some key data seems to imply this possibility. Though bankers claim that they created futures markets to provide a mechanism for commodity producers to hedge against volatile market prices, I have never bought the kool-aid the bankers were selling in this explanation for the rationale behind their creation of futures markets. Given that today, futures and spot prices for gold and silver in the short-term are entirely set by banker manipulation of the supply and demand for paper derivatives that often have no backing of any physical metal, I believe that bankers created futures markets for the explicit intent of allowing themselves to manipulate the prices of commodities and to enrich themselves, and themselves only, through the process of alternately and artificially inflating and deflating prices as would not be allowed in any type of free market. In other words, bankers invented futures markets to allow themselves to siphon off and steal money from other parties that wanted to invest in commodities with a mechanism, risk-free to them, that required deception and zero honest work and zero integrity.

The futures markets in commodities is such a deceptive market that it is hard to know even where to begin to unravel its many mechanisms of deceit in all their glory. Futures contracts traded on the world's largest commodity markets such as the COMEX in New York and the LBM in London allow bankers to commit reverse alchemy, turning real physical gold and real physical silver into nothing but false paper contracts and air. Secondly, through futures contracts traded in New York and London, bankers routinely defy the economic principles of supply and demand, and set short-term prices for gold and silver that literally have zero to do with the supply and demand dynamics of the physical gold and physical silver market. In the world of physics, such an illogical, comparable feat of deception would be the indefinite suspension of the law of gravity. Bankers invented paper derivative gold and silver markets to allow themselves to literally defy and suspend every single sound economic principle that exists.

This is important to understand because not only does understanding this concept make the bulk of what you learn in business school a lie and entirely useless, but also because bullion banks such as Deutsche Bank, Citibank, JP Morgan, Goldman Sachs et al that serve as the puppet conduits for more powerful families that control Central Banks, routinely used to lease physical gold into the open market as their primary mechanism to suppress the price of gold and silver. However, as their mechanism of fractional reserve banking began to threaten the viability and utility of the most widely used fiat currencies in the world, the USD and the Euro, bankers understood that they needed to utilize and/or create another mechanism to suppress gold and silver prices that could replace selling physical PMs into the open market as they no longer wished to give up a solid asset with no third party counter-risk for what they knew they were turning into essentially worthless pieces of paper. Thus bankers increasingly turned to the paper futures markets to manipulate and control the price of gold and silver and also served up additional bogus derivative products to the public like the GLD and SLV ETFs. Bankers knew that there was no way they could possibly control the price of gold and silver if the supply and demand determinants of physical gold and physical silver had anything to do with the price, so they conspired to fool the world into believing that the fake paper price they set was set by the supply and demand of the physical markets.

Collapsing OI of Gold/Silver Futures Markets Directly Related to MF Global Collapse?

And here's where MF Global enters the banking cartel gold and silver price suppression scheme. Today, short-term futures and spot prices of gold and silver have almost nothing to do with the physical supply and demand dynamics of gold and silver, as odd as that may sound. Bankers created the futures markets and paper derivatives in gold and silver to kill free markets and for the express purpose of suppressing gold and silver prices. Today we literally have no idea what the free market price of gold and silver should be or could be, besides the fact that both would be multiples higher than their current price, because of the fake paper market in gold and silver that the bankers created.

As well, bankers ensured that they armed a legion of worker bees in commercial investment firms all over the world that would represent these paper derivatives backed by very little physical gold and silver to their clients as the equivalent of investing in 99.999% pure physical gold and silver. In doing so, the worker bees thereby lured people all over the world into what will turn out to be the fatal mistake of not buying millions of troy ounces of physical gold and silver and instead buying their offering of fool's gold and fool's silver. When we receive a massive default of gold and silver futures contracts that stand for delivery on the COMEX or LBM, or if the SLV and GLD default, then, and only then, will the public start to see true price discovery of physical gold and physical silver in action. However, for clients of MF Global, unfortunately, they have already experienced the mistake of buying fool's gold and fool's silver from the bankers and have received air in exchange for gold and silver futures contracts they purchased that stood for delivery.

Bankers invented fake paper gold and silver contracts, because they knew that if they could not fulfill contractual obligations to deliver physical gold and physical silver because the contracts were a binding lie to begin with), that they could always renege on these contractual obligations and give the people the nothingness they truly owned in return. And thus, we have the story of MF Global.

Ratings agencies downgraded MF Global on Oct 25 and MF Global declared bankruptcy on Oct 31. If one scours the data that the Chicago Mercantile Exchange (CME) releases via its aggregated Commitment of Trader (COT) reports during this time period, one may not notice any data that immediately stands. However, investigation of the disaggregated reports reveals far more interesting patterns that almost undoubtedly can be traced back to the collapse of MF Global. In a period just preceding the MF Global collapse, from late August to mid October, the open interest (OI) in longs in gold and silver futures within the Managed Money category collapsed by 33.75% in gold (202,430 to 136,103) and 44.74% in silver (29,849 to 16,494). During this exact same time period, shorts in the gold and silver futures in the Managed Money category increased by 19.3% and 83.82% respectively (see the chart below). Within the Managed Money category, between Sept 13th and 27th, in just a two-week period, the drop in OI in the longs in gold and silver futures was even more pronounced, with a 25.41% plunge and 34.3% plunge in silver. I imagine if someone could trace the connection of this plunge in OI in the Managed Money category in the gold and silver futures markets, one would discover that a good deal of the plunge was somehow directly tied to the impending MF Global bankruptcy and its freezing and/or liquidation of gold and silver futures accounts in its possession.



After Phase I of the collapse in OI in the gold and silver futures markets, Phase II followed. When the story about MF Global's legalized client theft hit the presses, an enormous public distrust of the entire futures markets started to build. If clients lost millions of dollars in gold and silver futures accounts due to forced liquidation or freezing of contracts that they were holding for delivery, anyone that had considered using the futures markets to take delivery of real gold and real silver following the MF Global debacle obviously reconsidered their options. Thus, due to the massive fraud of the futures markets that was revealed by the MF Global collapse, another huge drop in the OI of gold and silver longs in the Managed Money category occurred during Phase II (as labeled in the above chart) that respectively amounted to an additional respective 11.79% and 7.48% plunge. In essence, it appears that the MF Global collapse served up the exact same price suppression effect as a CME issued initial or maintenance margin hike in gold and silver futures, which forces a tidal wave of unwanted and involuntary liquidation of gold and silver longs that consequently violate technical support lines and trigger technical sells.

Of course, we also have to factor in the temporary OI-increasing effect of the risk-on CME event when they lowered initial margins to a 1:1 ratio with maintenance margins at the onset of November. Still, given the figures presented in the chart above, it seems that bankers used the MF Global collapse to force liquidation of gold and silver longs in the futures market quite rapidly and drastically. Why is this important? This is important because typically strong hands ride out any temporary banker manipulations of gold and silver prices downward. In this case, strong hands, if they existed at MF Global, were not given this opportunity and were forced to liquidate or had their accounts frozen whether or not they desired such an outcome. Furthermore, if primarily strong hands were forced out of the futures market, this would leave the majority of volume in the gold and silver futures markets primarily in the hands of the criminal banking cartel. We've seen repeatedly, this past year in the US S&P 500 index, when low trading volume primarily controlled by the banking cartel has translated into curious and inexplicable market bounces of 2% in a single day. In other words, low trading volume allows bankers excessive and easy manipulation over markets. If this was indeed the scenario bankers deliberately created with the MF Global collapse, then the MF Global collapse and simultaneous collapse of open interest in gold and silvers futures certainly would have paved the way for the banking cartel to easily manipulate gold and silver prices...

http://archive.aweber.com/sku_newsle...liberately.htm

[don]

Re: MF Global.......

until all is hidden and forgotten . . .

The Neverending MF Global Story: Regulators Block The Truth




Instead of looking out for MF Global investors – and customers who are still waiting for their money – it looks like regulators and the bankruptcy trustees are busy suppressing information. Instead of full transparency, regulators and the trustees are holding onto crucial details that might tell us all who was asleep at the wheel when the broker/dealer and futures commission merchant (FCM) headed over the cliff.

Bob English, an independent trader and contributing editor to the blog, Economic Policy Journal, published a post this morning that raises serious questions about the Securities and Exchange Commission’s program of regulation for broker/dealers and, in particular, the agency’s role in keeping the truth from the public about what went wrong at MF Global. We’re also being kept from the truth about other broker/dealers who may be putting risky trades on their books or whose controls over segregation of customer assets may be weak or non-existent.

It seems that sloppy scanning and filing standards combined with preferential treatment for certain large brokers has substantially reduced the value of this part of the SEC’s public filing system. Since this is often the sole repository for disclosures about private companies, including broker dealers that do not have public holding companies, investors are being deprived of timely and critical information.

Even for those broker dealers that do have public holding companies, such as MF Global Inc., the financial notes of the broker audits disclose different, and oftentimes, more substantial information. Since it is now apparent that Louis Freeh, the former FBI Director cum MF Global Holdings trustee, is running cover for MF’s largest creditors, not the least of which is JP Morgan Chase, it is all the more critical that the integrity of the SEC’s public filing system be scrutinized.

On November 4, 2011, days after the bankruptcy filing, I described in an American Banker column the information the regulators and investigators should be looking for:

Since MF Global is a broker-dealer and a Futures Commission Merchant, PwC’s job went well beyond a standard audit. The auditor for a firm like this must annually review the procedures for safeguarding customer and firm assets in accordance with the Commodity Exchange Act. The annual audit must include a review of a firm’s practices and procedures for computing the amounts that, by law, have to be set aside in clients’ accounts each day. MF Global also had to send regulators an annual supplemental report from PwC. This report would describe any material inadequacies existing since the date of the previous audit and any corrective action taken or proposed.

I’m sure the CFTC wants to know if PwC ever documented any material inadequacies in MF Global’s controls over safeguarding customer assets. But wouldn’t they already know that? Regulators like the CME Group, the CFTC, the SEC, and FINRA received audited financial information annually, unaudited information semiannually and monthly reports that provided a capsule view of MF Global’s financial position. MF Global is required to perform calculations daily (by the CFTC) and weekly (by the SEC) to ensure that the proper amount of customer funds is set aside in the separate accounts.

PwC’s report to the SEC of internal control discrepancies for 2010, and there is one according to the filing index, is private. None of the auditor’s reports specific to the broker/dealer and FCM are available to the public on Edgar for 2011.

Is this just sloppy scanning? It’s no coincidence to me that auditor PricewaterhouseCoopers may also be playing a role in keeping uncomfortable or incriminating information from the public about its audit clients. PwC audits MF Global as well as Bank of America, JP Morgan, and Barclays. (See latest record fine against PwC for looking the other way at customer funds commingling at JP Morgan. PwC is also under investigation for similar sins at Barclays.) The largest audit firms routinely request confidential treatment of their reports and contract details such as engagement partners, whether as a vendor to the government or as a defendant in a contentious lawsuit.

There’s also a very strong interest on all sides of the MF Global mess in not leading anyone to third-parties such as bankers like JP Morgan, lawyers, and PwC, the auditors, too soon. Is there something in PwC’s secret audit reports and internal controls discrepancy reports for the broker/dealer for 2010 and perhaps 2011, that someone, anyone should have paid attention to earlier?

Here we are, more than two months after the forced liquidation of the MF Global broker dealer - it’s important to note this was no voluntary bankruptcy filing but a liquidation forced on MF Global by the Securities Investor Protection Corp – and the missing $1.2 billion of customer funds has not yet shown up.

The customer assets are gone, but no one in the officialdom - the two bankruptcy trustees, the CFTC, the SEC, or the Department of Justice – wants to admit just yet that the bankruptcy estate and, therefore, the customers will come up short.

No one but the CME Group will say that out loud. The CME Group timeline of events, updated most recently as sworn testimony by Terry Duffy to Congress, is the only reliable timeline out there.

Shortly after the filing on October 31st, all parties, including MF Global’s General Counsel Laurie Ferber, admitted that customer funds were short, not just misplaced. We’ve seen no new “on the record” facts from investigators, trustees, or regulators to refute these dramatic admissions.

CFTC in bankruptcy filing October 31 according to The Financial Times: The CFTC, in a court filing, revealed MF Global’s general counsel Laurie Ferber emailed the regulator at 7.18pm Monday – hours after the bankruptcy filing – to say that it had “discovered a significant shortfall in its segregated funds account”.

Joint statement of CFTC and SEC on November 1: “Early this morning, MF Global informed the regulators that the transaction had not been agreed to and reported possible deficiencies in customer futures segregated accounts held at the firm.”

When the trustees, the regulators, and the FBI finally stop looking under sofa cushions for the missing customer funds, they’ll have to start preparing lawsuits against third-parties. These potential “deep-pockets” include directors, JP Morgan, Jeffries, who underwrote the bond issue in August, and auditor PwC.

The Department of Justice will be forced to file criminal charges against someone.

What evidence will they base these lawsuits and criminal complaints on? Typically, a bankruptcy trustee hires a bankruptcy examiner to develop the theories and uncover the evidence used to hold executives, directors, bankers, underwriters, auditors and attorneys responsible for the failure of the firm and any fraud.

That hasn’t happened here. Why not?

Just look at the Refco bankruptcy, infamous predecessor firm of MF Global that also went down in flames from fraud and declared bankruptcy. Bankruptcy examiner Joshua Hochsberg did a bang-up report that pointed to several parties where recovery was possible. The trustee is still litigating on behalf of the estate, although it has not been easy. Criminal conduct was suspected from the start in the Refco case, too. Executives went to jail. That did not impede either making customers whole right away or going after third parties to make up the difference immediately.

Instead for MF Global we have a holding company Trustee more intent on protecting MF Global executives and a broker/dealer Trustee who’s had to be pushed kicking and screaming to respond to customers.

So much, also, for an investigation by the broker/dealer bankruptcy Trustee Gidden’s of what happened at MF Global by his law firm. Gidden’s firm is both customer and vendor to MF Global’s auditors, PwC and vendor to JP Morgan, MF Globals banker and biggest creditor. And so much for an investigation by the broker/dealer trustee that uses Ernst & Young as forensic accountants, the same firm, according to sources, that designed and implemented MF Global’s internal controls in time for their first Sarbanes-Oxley review and the firm that Randy McDonald, the MF Global CFO prior to current CFO and PwC alumni Henri Steenkamp, came from.

If it was only the SEC abetting the obfuscation of helpful information, I’d maybe accept an excuse that the volume of filings from broker dealers precludes the detailed review of the content or SEC action on any information, such as discrepancies in controls over segregated assets noted by an auditor, until it’s too late.

But the CFTC, who seems to be using leaks to the press to deflect attention from its own role and responsibility for keeping an eye on customers’ money, is doing it, too. There is no data regarding status of segregated customer assets for MF Global on the monthly required regulatory report for FCMs posted by the CFTC for September, 2011.
I asked the CFTC:

“Did MF Global submit their data as an FCM for September on time within your required timeframe? If the CFTC received the data on time, why did the CFTC decide not to publish MF Global’s numbers as of September 30th? The full report was posted to the website on November 10, after the October 31 bankruptcy, but the data is “as of” September 30 when the firm was still in business.”

The CFTC spokesperson would not go on record with his response. Based on our conversation and the policies published on the CFTC ebsite of handling this report, I’ve determined that the September 30, 2011 financial statement filings for all FCMs, FCM/BDs, and RFEDs were originally due October 26th. The CFTC gives itself 12 business days after the due date to publish. It appears that organizations were given additional time due to the Veteran’s Day holiday. The Commission sates that it “generally” publishes data for active FCMs only. MF Global Inc. declared bankruptcy October 31, 2011. At the time the September data were posted, MF Global Inc. was no longer an active FCM and therefore the firm and its data was deleted for the report.

Was there something about what MF Global reported for September regarding its required customer segregated funds position that in retrospect, post liquidation and holding company bankruptcy filing, would be embarrassing to the CFTC? DidMF Global report at all and on time? Did the CFTC have a head start on the MF Global situation that they did not act on?

We will never know since so much information that’s supposed to be public, transparent, and informative is being held back from the public, from investors, and from the MF Global customers still waiting to get their money.

http://www.forbes.com/sites/francine...rom-coming-out

[Kcim67]

Re: MF Global.......

You're coming with us Mega! http://www.golemxiv.co.uk/2012/01/a-...its-of-hormuz/

[don]

Re: MF Global.......

Will Corzine walk? Looks increasingly so. As Prins points out, he knows a lot about our financial mafia. In an interview with Bernie Madoff, repeatedly emphasized was he hadn't snitched.

start at 12:50

[Thailandnotes]

Re: MF Global.......

First Time I've seen this at Vanity Fair.

Can anyone access this article?

http://www.vanityfair.com/online/dai...-goldman-sachs

App doesn't work, at least on my laptop. Comments below the app download imply it doesn't work period.