{"id":184571,"date":"2012-03-15T20:46:00","date_gmt":"2012-03-16T01:46:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2012\/03\/15\/what-is-the-last-place-you-would-expect-to-hear-someone-calling-for-an-indictment-of-jon-corzine\/"},"modified":"2012-03-15T20:46:00","modified_gmt":"2012-03-16T01:46:00","slug":"what-is-the-last-place-you-would-expect-to-hear-someone-calling-for-an-indictment-of-jon-corzine","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2012\/03\/15\/what-is-the-last-place-you-would-expect-to-hear-someone-calling-for-an-indictment-of-jon-corzine\/","title":{"rendered":"What is the Last Place You Would Expect to Hear Someone Calling for an Indictment of Jon Corzine?"},"content":{"rendered":"

Well, you know, the OP\/ED page of the New York Times<\/i><\/a> is close to the top of that list, but Joe Nocera just called for prosecutions in the MF Global matter:<\/p>\n

It\u2019s sure starting to look as if Jon Corzine is going to get away with it.<\/p>\n

By now, it has been well established that Corzine\u2019s former firm, MF Global, committed the sin of sins for a broker-dealer. In late October, during the final, desperate days before it entered bankruptcy proceedings, its executives took money from segregated customer accounts \u2014 money that belonged not to MF Global but to the farmers and commodities traders that were its clients \u2014 and used it to prop up its rapidly collapsing business. Nor was this petty cash: of the $6.9 billion in customer assets that MF Global held, a stunning $1.6 billion is missing. There is virtually no chance that the full amount will ever be recovered.<\/p>\n

Let\u2019s not mince words here. These executives committed a crime. Virtually every knowing violation of the Commodities Exchange Act is a crime, but taking money from segregated customer accounts is at the top of the list. And for good reason. Customer money is supposed to be sacrosanct. If a broker-dealer goes bankrupt, the segregated accounts are supposed to remain safe, a little like the way bank deposits remain protected if a bank goes under. Indeed, customers need to be able to trust the fact that their money is segregated and protected at all times. Otherwise, the markets can\u2019t function.<\/p>\n

Yet, a few weeks ago, Azam Ahmed and Ben Protess, who have done a remarkable job covering the MF Global bankruptcy for The Times, wrote an article suggesting that prosecutors were having trouble putting together a criminal case against anyone at MF Global. So far, wrote Ahmed and Protess, they\u2019d been \u201cunable to find a smoking gun.\u201d In fact, they continued, \u201ca number of federal prosecutors have expressed doubts\u201d that MF Global \u201cintentionally misused customer money.\u201d Apparently, the current theory is that it was all just a big accident, the chaos of those final days causing the firm\u2019s executives to tap into customer funds without realizing it.<\/p>\n

Excuse me while I roll my eyes. Of course there isn\u2019t a smoking gun. As a general rule, financial professionals tend not to write e-mails that say, \u201cHey, we\u2019re desperate. Let\u2019s break into the customer accounts!\u201d And, of course, they are always going to say it was unintentional. They are saying it already, starting with Corzine, who told Congress last year that \u201cthere was no intention to violate segregation rules.\u201d <\/p><\/blockquote>\n

He’s right.<\/p>\n

He’s also right that the failure to prosecute is an assault on the idea of the rule of law.<\/p>\n

It’s not a particularly surprising conclusion to draw, but the fact that it’s appearing in the New York times<\/i> is a big deal.<\/p>\n","protected":false},"excerpt":{"rendered":"

Well, you know, the OP\/ED page of the New York Times is close to the top of that list, but Joe Nocera just called for prosecutions in the MF Global matter: It\u2019s sure starting to look as if Jon Corzine is going to get away with it. By now, it has been well established that …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[970,1004],"tags":[],"class_list":["post-184571","post","type-post","status-publish","format-standard","hentry","category-corruption","category-finance"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/184571"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=184571"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/184571\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=184571"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=184571"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=184571"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}