U.S. investigators of bankrupt MF Global Holdings Ltd. (MFGLQ) have yet to determine after four months of probing whether enough evidence exists to pursue a criminal case, a person with knowledge of the matter said.
When the broker-dealer run by former Goldman Sachs Group Inc. Co-Chairman John Corzine filed for bankruptcy Oct. 31, federal prosecutors in Chicago had a grand jury issue a flurry of subpoenas, said the person, who declined to be identified because they aren’t authorized to speak publicly.
Investigators from the Commodity Futures Trading Commission, Federal Bureau of Investigation and other agencies have been analyzing events that occurred before the bankruptcy, when as much as $1.6 billion in client funds went missing, said the person.
After grand jury subpoenas were issued by Patrick Fitzgerald, the U.S. Attorney in Chicago in the days after the firm’s collapse, federal investigators turned their focus to reviewing the mountains of documents on thousands of transactions worth hundreds of millions of dollars, the person said. Since that time, no decision has been made about whether charges will be filed against MF Global officials, they said.
In fact, no determination has been made whether Fitzgerald or U.S. Attorney Preet Bharara inNew York would lead any prosecution, the person said. Randall Samborn, a spokesman for Fitzgerald in Chicago and Carly Sullivan, a spokeswoman for Bharara’s office, declined to comment.
Clearing House
MF Global, one of the largest clearing brokers at CME Group Inc. (CME), used about $700 million of customer funds to “meet liquidity issues” at its broker-dealer in the days prior to the bankruptcy, according to a timeline of events released by CME, the world’s largest futures exchange.
CME said it received subpoenas in November from the Chicago federal grand jury investigating MF Global’s collapse, as well as the CFTC, according to a Feb. 28 regulatory filing.
The grand jury subpoena was issued the day after MF Global collapsed. The CFTC subpoena came the day after that, CME said.
CME Group, which had auditing authority over the failed futures broker, was asked by the grand jury to produce information and witnesses in connection with the investigation, the Chicago-based company said in a regulatory filing.
While Fitzgerald’s office sent subpoenas early in the process, no more have been issued, the person said. The FBI opened up a formal inquiry in early November, said the person.
Received Subpoena
The company also received a subpoena from the CFTC and a document request from the Securities Investor Protection Corp., the trustee handling MF Global’s liquidation, it said. On Jan. 31, MF Global’s bankruptcy trustee requested documents as well, according to Anita Liskey, a CME spokeswoman.
SEC Enforcement Story Doesn’t Add Up for 2011
U.S Securities and Exchange Commission officials have been citing a jump in the number of enforcement actions last year as proof that an overhaul of the agency’s investigative force is bearing fruit. The claim isn’t supported by a detailed examination of the statistics.
SEC Enforcement Director Robert Khuzami said in November that the unit filed 735 actions in fiscal 2011, “a record- breaking performance during a period of resource constraints.” Citing the numbers, SEC Chairman Mary Schapiro told a Washington conference last week that the agency’s changes “are already producing record results.” The SEC also noted the record numbers in justifying its 2013 budget request to Congress.
Still, more than 230, or 31 percent, of the 735 matters weren’t new. They were so-called follow-on administrative proceedings that institute penalties in cases that already had been brought, the examination by Bloomberg News shows.
Excluding those actions, such as barring people who’ve already been found guilty of fraud from working in the industry, the SEC filed 499 original cases last year, fewer than the 520 in 2009, the year before the reorganization. In 2009, 144, or 22 percent, of the 664 total actions were follow-on proceedings.
“There’s so much noise in the reporting system that we really can’t tell whether the restructuring is working or not,” saidJames Cox, a securities law professor at Duke University.
The SEC has been under pressure for more than three years to show results. Lawmakers and investors have faulted the agency for missing Bernard Madoff’s multibillion fraud and for doing too little to hold Wall Street accountable for the financial market turmoil of 2008. At the same time, the agency, which has said it lacks sufficient resources to do its job, has struggled to get additional funding from Congress. Schapiro is scheduled to defend her budget request March 6 before a House panel.
29 comments:
Sounds like a good strategy - just generate mountains of documents on thousands of transactions worth hundreds of millions of dollars, and you too can waltz off into the sunset worry-free after stealing millions.
No worries from federal investigators, because the mess is too complex for them to focus their review on the crime.
Meanwhile, those who chose to store their savings in the 'Bank of Mattress' rather than MF Global still have all their money.
Baffle them with bullshit and eventually they will run out of money for attorney fees.
You can bet JPM got their money. Also thank you all for your kind words yesterday. I am fine today as it takes me a day and a good cry to process the loss.
Seems like another hohum market day. The mining sector is all in the red on my watch list. Silver is taking a 2% hit, but I am hoping to pick up a couple of more ounces of gold buffalos today. I am waiting on the call or I will go online and buy from Gainesville Coins.
The noise on Greece seems to be quiet and all the gloom and doom is on hold as far as the MSM is concerned. I really think they believe the Fed stopped printing and we are on our way to recovery.
How sad is the election for POTUS with it shaping up to be Romney vs Obama with Santorum (who scares me) still hanging on. Of course none of this will loosen the grip of Wall Street on the political process.
Mish was a little late on the NY pension fund story today. I think we had that last week.
Speaking of politics, visit The Dungheap blog (link on the left sidebar) for a comparision of Russia vs. the US.
Putin will be re-elected on Sunday.
Thought for the week in my calendar today was from Earl Wilson, "If you wouldn't write it and sign it, don't say it."
wise words for our times...
By the way, completed mattress purchase. NOT what we'd planned to spend but with bad backs we had to do what we had to do.
I guess for our 40th anniversary in June we'll have celebrated by getting a new mattress and taking a week's vacation to go to a Scottish festival in western MD (far cheaper than a cruise or air fare even if prices rise). Again, not planned.
I think one advantage to age is learning to roll with the punches, not make LONG-ranged plans, and stopping to smell the roses as you become aware that dirt six-feet-under can creep up on you when you least expect it. Perhaps that is why you become aware to make each moment count and find joy in what IS instead of worrying about what 'could' be or 'should' be...
Interesting article at Minyanville by Aaron Brown entitled: Cold War II: Why Investors Should Prepare for a Decade of Escalating Political Crises
I'd be interested to know what some of our commentators with far more market knowledge view this....
"would I be correct in saying that Louise Yamada would be an example of a technician who looks mainly at charts"
yes, Louise is an excellent trader who trades mainly on technical analysis, ie the charts.
She tends to look at longer term charts, for trend trades that can last months or years rather than days.
Whatever she says, I would tend to give it a lot of credit, as she has the experience and skills to call it as she sees it - pretty well.
Two thumbs up for L.Y.!
"A recent report from American Water suggested that all of us can expect an increase from an 'average' of $400 per year water bill to $900 in the near future"
Well, living way out in the country, no worries here on that - my well won't be going dry anytime soon, I hope.
As down the road is a river, which is only about 20 feet elevation below my house (not a large river, but the bottom of a big valley, no risk of flooding for me).
My neighbor (I use the term loosely out here, they are about 500 yards uphill) has had problems drilling a new well (well, the previous owner, not the ones who moved in 3 years ago, I'm not sure if they know about this), they had to drill several holes, the drilling rig was there for almost 2 months, before they hit a reliable spring (I assume, since they took the drilling rig down and left).
An other good reason to live out in the sticks.
"Our dependence on everyone having 1,2,3 or more CARS has to do with our dependence on gas, auto makers, etc."
Well, they say North America has a 200 year supply of natural gas now, it is in surplus and very cheap - so I can't see why we aren't running every vehicle on it now, or planning on moving to it soon.
I know taxis in Toronto etc have been running on propane for 30+ years now, it is very cheap compared to gasoline. But there are very few service stations to buy it, you have to be careful, if you run out of propane, it is tow truck time to a station.
"Dual fuel" (gas/propane or gas/natural gas) has been available for 30 years or so, but only for taxis and couriers, not so much for the public. Which is the best option, you run on the propane or natural gas until it runs out, then burn gasoline until you can get to a refilling station.
"I think self-sufficient communities for aging populations or even younger ones would be a great idea. Community garden areas. Local business. Health care. etc"
cl, you are on a roll there - great idea!
"Oh, and able to have say, 2, small animals."
Another excellent idea, they say having pets is great for seniors, the companionship plus the daily feeding/walking keeps people 'with it' for many years.
Apparently, having pets is a sign of good mental health, and is even better for seniors.
But the average "seniors home" probably won't allow pets, which is doing the residents a big disservice.
"To make it work with solar, there would have to be a way to store the electricity for the night,"
You nailed the big problem with solar, it only works when the sun is shining, and though you can back it up with wind (which can refuse to blow at times), you still need the "base load generation" which can only be provided by nuclear or hydro-electric or natural gas generation.
Energy storage is the holy grail, if you can invent a cheap effective system, you will be a billionaire very quickly.
"Let's just say that a visit to the dentist would've been preferable to driving in Seattle's traffic."
Pretty much common to any big city, the bigger the population, the worse the traffic.
Public transportation is a good thing, but it can't really replace the private vehicle for many trips, like for those who live around the suburban sprawl.
You can say it is a bad idea to build our cities like that, but it's a bit late now.
"No worries from federal investigators, because the mess is too complex for them to focus their review on the crime"
Well, when your "federal investigators" are like the excuse making cretins in that link I posted last week from Big Picture Blog, I think it is a given no Bankster will be arrested any time soon.
That was an embarrassment. Every US citizen should be ashamed, after watching that one. Pathetic.
"but with bad backs we had to do what we had to do"
Hey, a good night's sleep and waking up able to get up and do things - priceless.
I find all mattresses too mushy now, after sleeping on the floor for a few years. Which makes traveling a bit rough, I can't sleep on any hotel bed etc.
Any my relatives think I'm nuts. But who cares, I can sleep on the bare wooden floor if I have to.
""If you wouldn't write it and sign it, don't say it."
wise words for our times..."
Wise words indeed, but I think that comes with age and maturity too, when you are young you just can't help blurting out words you may regret later.
I work with some young people who suffer from 'run on talk', apparently silence has to be filled with their inane thoughts, always.
They're young, they'll get over it. I was probably much the same at their age.
"stopping to smell the roses as you become aware that dirt six-feet-under can creep up on you when you least expect it."
Damn straight, cl.
Support wild life, throw a party.
If I didn't have to work overtime tomorrow, I would. Damn job.
And remember, they say 1 or 2 drinks a day is good for your health, so 6 or 8 must be superb. You'll be sober a long time when you are dead.
"The Dungheap blog (link on the left sidebar) for a comparision of Russia vs. the US.
Putin will be re-elected on Sunday."
Ole Vlad the Impaler may be world class prick, but at least he has a vision for his country, and works to make it happen.
I may not like him, but I can respect him as a strong leader.
Unlike our Western politicians, who govern by opinion poll, and who have a long term horizon of the next election, if that.
GAW, you are on a roll today.
Cheers!
Thanks Mammoth, cheers to you as well. Hope everything is going OK where you are.
The article cl was referring to is:
http://www.minyanville.com/business-news/politics-and-regulation/articles/game-theory-aaron-brown-what-is/3/2/2012/id/39701
Quite good, I would say, everyone should have a read there, it's not too long.
I would say it is all part of this crisis period finally getting resolved - a process which will take probably the rest of this decade. You can't blow the biggest credit bubble in world history and then burst it and expect quick solutions.
The future is uncertain, I am certain.
Apparently the shiny metals had a bad week, according to Bloomberg Business radio here.
I'll do some charts and post my opinion on Sunday, but overall, I would not be too worried.
It's not like this crisis is over, and Governments won't be printing a lot of digital 0s in the next few years.
Silver and gold are probably still out-performing the stock market, this year, and for the last decade.
They are volatile though, which is enough to scare the average Mom'n'Pop investor away. Which is a shame, as it as a passive buy'n'hold thing mostly, unless you fancy yourself a trader.
Just think if you bought a lot of oz's 10+ years ago, and never sold. While your "broker" was grousing about it the whole time.
Tell those idiotic Germans to get stuffed:
http://www.bloomberg.com/news/2012-03-02/greece-is-reneging-on-programs-to-spur-economy-germany-says.html
"Greece is reneging on programs to spur its economic competitiveness that it signed with Germany since July, calling into question its willingness and capacity to revitalize its economy, the Economy Ministry in Berlin said...
Greece’s implementation of project targets “remains insufficient,” the ministry said in the report. Revamping Greece’s economy at the same time as cutting its debt “is decisive -- that’s why Germany agreed to its support for the programs.”
For the Greek government, the programs “obviously have no priority,” the ministry said. “This is unacceptable from the German standpoint.”
Greece’s economy may shrink by 4.4 percent this year, the European Commission forecast on Feb. 23."
Apparently Greek total economic meltdown is acceptable to Germany, as long as their Banksters get paid.
you have to watch this video, see the German Bankster exposed:
http://market-ticker.org/akcs-www?post=202805
"Astounding attempt to deflect -- first before the question is asked in preventing a follow-up, the bankster tries to dodge the question and the journalist refuses to capitulate and nails Sir Bankster to the wall, then takes his head off."
Check out the woman to the Bankster's right, who tries to "move the discussion" along.
I don't know who the Irish journalist is here, but God bless him.
ZH: "As Greek CDS Hit Record, German Economy Minister Accuses Greece Of Reneging"
"Wait, you mean a record February collapse in the Greek economy is inadmissable? Sure enough, Greek CDS, contrary to expectations for a no trigger event, just hit an all time high earlier at 76 points up front (i.e., more buyers than sellers), as basis player are loading up on protection and preparing for the March 8 PSI deadline"
ZH: "European Solidarity - "Everybody Knows The Spanish Are Lying About The Figures” "
"...Funny. And yet the people are supposed to believe in the mumbo jumbo that is Europe's fiscal pact, or frankly anything else? Perhaps the senior source in Berlin should have just stepped up and told the outright truth: "Everybody knows that everyone in Europe is lying about everything."
And therein lies the rub. Because with nobody having any real clue what state the real global economy is in, and everyone knows it is far worse than represented yet central banks throwing gobs of liquidity in an attempt to mask a problem that stems precisely by the kind of inaction that this kind of intervention perpetuates, we can guarantee that the next time around we have adverse statements about the various European economies, it will not be a lie, but an understatement..."
GAW I saw that video last week and it was classic evasion. "Why is it in the best interest of the Irish people sir to bail out a defunct bank?" Answer from banker "We Blah blah blah ECB stability Blah blah blah." Follow up from questioner "Sir you didn't address the question." Bankster replies "Well yes I did blah blah blah next question please." I would call that answer what it was, bullshit. Nothing more and nothing less and that is all we get in America policitians and from the ECB types as well.
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