Wednesday, December 14, 2011
- Corzine Knew About Customer Funds?!
I'm bumping up against the line here, so let me be perfectly clear. All I'm doing in the title of this post is repeating what's in the attached video, I have no new allegations about Corzine's activities.
Now, let me say this. That sounds pretty damning, but having an unnamed MFGlobal employee allege that Corzine knew about something is a long LONG way from actually proving it. The employee could have easily been mistaken. Given the pandemonium that must have been the MFGlobal clearing department in the days up to the bankruptcy, that would be an easy mistake to make. We need a lot more info before we can say anything definitive about Corzine's future.
But Duffy (pictured) from the CME has said that the they reported this information to the justice department, and the last time I checked, Jon Corzine wasn't black. So if all this is true, it's not totally impossible that Eric Holder might actually end up prosecuting him.
But if it's true, then the odds of another Democrat governor going to jail has just been ticked up a notch. I wonder what the intrade odds say.
A lot of the committee meeting was spent asking farmers and investors what it would take to make them feel safe again. As a burned investor, I can offer a comment there.
What I would want is a clawback from the parent company of 100% of all customer funds; every last penny. We should not be included in the broader bankruptcy we should be paid first. I didn't have a bank account with them I had the equivalent of a safe deposit box. And the debtors of MF Global do not have the right to take my cash (even a portion of it) because MFGlobal screwed up.
Think of it this way. Suppose a man wanted to speculate in the debt market, so he went and took out a bunch of second mortgages to raise capital. When he lost money in the market and they went to repossess, it turned out that he didn't actually own all the collateral he put up. That does not give the right to his creditors to dispossess the people in those properties he never owned. But according to what I'm told, that is EXACTLY what the other MFGlobal creditors have alleged.
Now that could be mistaken too. We'll have to wait and see. But it's all been so badly done that I would want more than just the money back. I'd want a scalp. I'd want the person responsible to be made an example of, with a nice long federal prison stay and a variety of other sanctions. I don't care that he was a big fundraiser for the Democrat party. You want to make me feel better, make an example of the guy who broke the very first rule of all financial management. You never touch the customer's money without getting them to say it's OK first.