We now have a smoking gun in the matter of MF Global, an email detailing how John Corzine ordered customer funds transferred to JP Morgan Chase, and the fact that JP Morgan asked for, and never got a statement that they weren’t customer funds:
Jon S. Corzine, MF Global Holding Ltd.’s chief executive officer, gave “direct instructions” to transfer $200 million from a customer fund account to meet an overdraft in a brokerage account with JPMorgan Chase & Co. (JPM), according to a memo written by congressional investigators.
Edith O’Brien, a treasurer for the firm, said in an e-mail quoted in the memo that the transfer was “Per JC’s direct instructions,” according to a copy of the memo obtained by Bloomberg News. The e-mail, dated Oct. 28, was sent three days before the company collapsed, the memo says. The memo does not indicate whether that phrase was the full text of the e-mail or an excerpt.
arry Zubrow, JPMorgan’s chief risk officer, called Corzine to seek assurances that the funds belonged to MF Global and not customers. JPMorgan drafted a letter to be signed by O’Brien to ensure that MF Global was complying with rules requiring customers’ collateral to be segregated. The letter was not returned to JPMorgan, the memo said.
The money transferred came from a segregated customer account, according to congressional investigators. Segregated accounts can include customer money and excess company funds.
So Corzine ordered the illegal transfer of customer funds, and JP Morgan was worried about this that they demanded a letter saying that they were not doing this, but never followed up on their demand.
I think that the bigger story here is JP Morgan. We already knew that Corzine was hip deep in stealing customer funds, what we didn’t know that JP Morgan knew, but took the money anyway.
These folks need to be frog-marched out of their offices in handcuffs.
They need to be tried under RICO and if they go to jail it should not be a white-collar resort prison, they should go to a federal POUND ME IN THE ASS prison.