Somehow, the chief investment guru of the Obama Administration, former New Jersey governor, Democrat senator, and top Obama campaign contributor Jon Corzine – managed to lose $1.6 billion of his clients’ money, in the fiery crash of his MF Global corporation. During the extensive congressional investigations, the term “vaporized” was floated.
Apparently “vaporization” doesn’t mean jail time when you make a billion dollars disappear, which is probably for the best, since it would be tough on C-SPAN to cover Congress if they were all in prison.
Now CNN Money brings us the happy news that congressional investigators have tracked down the missing client funds. Unfortunately, the firm’s clients won’t be getting a big chunk of it back any time soon. Six months after MF Global collapsed, customers are said to have recovered about 70 percent of what they’re owed, and some of them might get to 80 percent following a recent bankruptcy court action. Strangely enough, there still isn’t any sign of orange jumpsuits for the persons responsible.
Investigators probing the collapse of bankrupt brokerage MF Global said Tuesday that they have located the $1.6 billion in customer money that had gone missing from the firm.
But just how much of those funds can be returned to the firm’s clients, and who will be held responsible for their misappropriation, remains to be seen.
James Giddens, the trustee overseeing the liquidation of MF Global Inc, told the Senate Banking Committee on Tuesday that his team’s analysis of how the money went missing “is substantially concluded.”
“We can trace where the cash and securities in the firm went, and that we’ve done,” Giddens said.
So what happened to the loot?
Roughly $700 million of the missing money is now locked up with MF Global’s subsidiary in the United Kingdom, where Giddens and his team are engaged in litigation to have it returned to U.S. customers. Giddens said he is “reasonably confident” that these funds will be recovered, though he added that it will be a lengthy process with no guarantee of success.
Another $220 million was transferred inadvertently from the accounts of securities customers to those of commodities customers. That money is now in limbo amid a dispute over which customers it belongs to, said Kent Jarrell, a spokesman for Giddens.
The final $680 million or so was transferred to other financial institutions with which MF Global did business, including a substantial portion that went to JPMorgan.
Giddens said his team has “a solid basis for seeking the recovery of some of the funds that were transferred to JPMorgan,” and is engaged in ongoing talks on the issue. JPMorgan did not immediately return a request for comment.
I suppose “limbo” is an improvement over “vaporization.” Maybe they should allow MF Global clients to visit their money periodically in limbo, and gaze longingly at it, while they hold hands and dream of happier times.
Speaking of those orange jumpsuits:
“Crimes have been committed here without a doubt,” said James Koutoulas, an attorney and trader who has been advocating on behalf of MF Global customers.
“We think there are enough facts out here to start arresting people and start filing charges.”
Regulators from the SEC and Commodity Futures Trading Commission “can only seek civil penalties and restitution for customers, but their findings could help form the basis of a criminal case brought by the Justice Department.”
Oh, that’s encouraging. Advice for SEC regulators: do not send Attorney General Eric Holder an email to request that criminal case. He doesn’t always read his emails. He missed a ton of them dealing with some wacky hijinks involving American guns in Mexico.
Jon Corzine himself may face a civil suit from the trustee overseeing MF Global’s liquidation. Meanwhile, he is still delivering huge amounts of money to the Obama campaign. According to the Weekly Standard, Corzine is listed as a top bundler in the most recent Obama 2012 campaign documents, with over half a million dollars to his credit. As far as I can tell, none of it was “vaporized.”
But remember, Barack Obama is the Little Guy’s best defense against Wall Street predators!