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MF Global Customer Funds Were Not "Vaporized" - Stanley Haar Takes WSJ to Task
by Stanley Haar
As a individual trader and CTA whose accounts are owed several million dollars by MFGI, I would like to express my shock and disappointment with [yesterday's] front page article; I expected better from the WSJ. Your article gives the appearance of having been ghost written by Andrew Levander and/or the JP Morgan legal department. Among the key errors/omissions:
• Client money in segregated bank accounts was not "vaporized"; it was stolen via illegal transfers to support MF's proprietary trading positions and to repay creditors such as JP Morgan. Those transfers are and always were illegal…….even "under rules at the time". Your use of that irrelevant and misleading phrase twice only serves to deflect attention from the criminal acts committed by Corzine, Abelow, Steenkamp and Ferber. Your own article goes on to state that "rules require customer funds to be set aside and kept safe". Even Gary Gensler and Jill Sommers have testified that customer funds needed to be segregated at all times. The failure to do so is a clear violation of the Commodity Exchange Act; "intent" is not an element of this criminal act.
• Although you correctly cite the difficulty in recovering the stolen funds, you fail to explain the main reason for this difficulty: the highly suspicious and irregular way in which the bankruptcies of MFGI and MFGH were implemented. Under a properly executed FCM bankruptcy process, customer segregated funds always have absolute priority over all other creditors. Instead, MFGI was placed under a SIPA liquidation, even though 98% of the accounts were commodity accounts not covered by SIPC protection. Compounding this bizarre step (apparently orchestrated by key general creditors such as JP Morgan and Goldman Sachs without resistance from the CFTC), the assets under the control of MFGH were not frozen and that entity was allowed to continue operating under Chapter 11 bankruptcy rules. This allowed unknown billions in assets to be dumped into the hands of George Soros, JP Morgan and various hedge funds at bargain prices (as reported by your newspaper), thereby locking in realized losses on those positions and moving assets out of the reach of the MFGI trustee.
• The bottom line is that customer funds were stolen twice: first by the illegal looting of segregated accounts by MF management, followed by the fraudulent way in which the bankruptcy was structured so as to circumvent the priority status of customers in the distribution of MF assets. This is the real story and scandal of MF Global, and perhaps one day your paper will decide to cover it.
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Indict, arrest and prosecute Gensler.
The lying little prick was involved up to his eyeballs.
"if you'd only had a brain" you'd keep it in phys.
Even if you get your money back, what you gonna do with it? Buy treasuries? futures? then don't complain when you get f*** again.
Tell that the Gerald Clemente, he had allocated gold with the MOFO"S Global, with serial numbers on his "paper" that said paid in full. Hmmm. Where you keep your phys partner? No reason to dis somebody for being screwed by the system man, the screwers will get around to all of us sooner or later. Maybe tonight.
By now even my parents know the system if screwed.
And if you still dealing with it, you either think and hope that you are MFG and can f*** others or you have no brains.
No, really, and I get better returns on my phys than any 401k out there.
Celente needs psychiatrist
"Mistakes were made.."
We'll be hearing that one for quite awhile
"Mistakes were made.."
Always the first and best sign you're dealing with a fork-tongued snake -- use of the passive voice to describe unsavory events.
aand how..!
Hey, there is virtually no one in this country that believes the funds were vaporized. Oh wait there is one (like the commercial of Jimmy Kimmel and the red head kid) Eric Holder. The disdain I have for our current head of the Justice Department is bar none.
Don't forget the corrupt boss who put him there.
Go get these scumbags SH. I especially like the way you name the vermin, should make it easier for the WSJ to resource when the perp walks begin. I'm gonna call you out though on your statement "Although you correctly cite the difficulty in recovering the stolen funds" for 2 reasons. Don't give this scum any help and 2: RICO has been in use for decades with lots of lawyers schooled in it's application. It could be all unraveled quickly should the govt./ private sector put as many honest lawyers on the case as there are in congress. Oh, yea that's the problem, isn't it. Well, good luck in your recovery; sir.
Hell of an article. And since none of *y'all* are willing to say it - no doubt all hung up on your dignity or some such - let me just say this: Haar, Haar, sir!
But only for perps who made for great soundbites when vilifying and for whom they actually had a desire to prosecute. When it comes to the guys providing them the cash "ehhhh-ayyyyy-ehhhhh?"
Stanley writes as if he expects some sort of justice to be rendered. There is no justice on Wall Street. It's like a prison, the biggest dude get's the short, weak fat guy in the shower every time.
So did the WSJ publish this?
Dear Stanley,
Get over it. It's completely legal by law.
Better enjoy music chair game with (female) nakeds :)
Best regards,
Bunga Bunga
A minor subplot to the trillions of funny money owned by the public that is being stealthily moved around so TPTB can buy up real assets and weather the storm. MF Global customers will at least get a portion of their money back, the bad news is that money won't be worth much (or anything for that matter) in the near future.
It's JP Morgan that is likely to get vaporised when Greek debt defaults.
barnhardt.biz
Join the conversation Red Alert: Credit Default Swaps Explained Posted by Ann Barnhardt - January 31, AD 2012 11:41 AM MST News out of Brussels last night was that a package is being put together that would haircut Greek bonds by 70%, thus only paying back 30 cents on the dollar to anyone holding Greek paper. This will set a precedent that will eventually be played out all over Europe.
Full AP story HERE.
This is extremely bad, and will spell the end of the big U.S. banks and the financial system in total. But EVERYONE needs to understand credit default swaps (CDS) first. CDS are insurance policies that investors have traded – very similar to OPTIONS for my old clients and cattle people out there. Buying a CDS is essentially like buying a put. The buyer pays a premium, or fee, to the writer, or seller of the CDS that says that the seller will guarantee and make whole the buyer’s position in a specific bond IF the entity behind the bond (such as Greece) defaults. In exchange for paying the premium and being made whole after a default, the buyer of the CDS surrenders the bond position to the seller of the CDS, and the seller gets to keep both the premium paid plus gets to keep any salvage value of the defaulted bond.
So the CDS buyer pays a premium or fee, and the seller guarantees against a default but gets to take ownership of the bonds and keep any salvage value if a default does happen.
Here is what I STRONGLY suspect is going to happen with this 70% haircut plan. The bondholders are going to take the full brunt of the 70% haircut, BUT the body that actually dictates whether or not a default has happened – the International Swaps and Derivatives Association (ISDA) – will declare that this credit event is NOT a default, and thus all of the banks and entities that THOUGHT that their European debt positions were hedged with CDS will find out that they have no protection at all. And then the excrement hits the fan. Big time.
The argument that the ISDA will make is that a 70% haircut isn’t a default. This is, of course, abject horse manure. Try paying only 30% of your mortgage and see how quickly the word “default” is used. They are using the 70% figure because a 30% payout is just enough to make the legalistic argument that a FULL default hasn’t occurred - which makes NO SENSE because salvage value is one of the core concepts in CDS contracts. The SELLER GET THE RIGHTS TO THE SALVAGE VALUE, which by definition implies that the default need not be 100% in order to execute the CDS. ARRGGHH!!!!
The obvious question is, WHO IS IT THAT HAS WRITTEN ALL OF THESE CREDIT DEFAULT SWAPS, because they are going to make off like bandits. They are going to have received all of the premium, the default event will have happened, and they won’t have to pay out. Like the old Dire Straits song says, “Money for nothin’ and chicks for free.” Fish in a barrel. Lambs to the slaughter. Candy from a baby.
I will venture a guess as to who two of the largest writers of Eurotrash CDS might be. How about . . . oh, I dunno, Goldman Sachs and J.P. Morgan? Guys, what MF Global was doing with customer funds – “hypothecating” and leveraging the customer money into European bond positions “hedged” with credit default swaps – THEY’RE ALL DOING IT. All of the brokerage houses. All of the investment firms. All of the retirement account custodians. ALL OF THE BANKS. I can almost promise you that Goldman Sachs and J.P. Morgan have been sitting on a net short position in Europe, quietly betting against European paper, all the while pimping and selling long European positions (It will be fine! The bailouts will come!) AND happily selling TRILLIONS of dollars worth of CDS to their customers to “guarantee” the customers’ long-Europe positions against default, knowing full well that Europe WOULD collapse. (Duh. Anyone who can do 2nd grade math knows that.) When the collapse happened they knew from the beginning they WOULD NEVER HAVE TO PAY OUT ON THE CREDIT DEFAULT SWAPS THAT THEY WROTE because the ISDA was populated BY THEIR OWN PEOPLE, and the ISDA would therefore never declare a default. They would therefore pocket the premium received, but most importantly would then swoop in and BUY UP ALL OF THE BANKS AND BROKERAGES DESTROYED BY THEIR UNHEDGED NET LONG-EUROPE POSITIONS.
Think about it. Why would a Goldman or a J.P. Morgan write trillions of dollars of CDS on Europe in the first place? CDS aren’t like regular options. CDS are binary in their outcome. Either there is no default, or there is, and the payout required would be massive. There is no middle ground. There is no “moderate” payout on a CDS. It is either all-or-nothing. Why would Goldman and J.P. Morgan write these CDS contracts knowing full well that Europe was mathematically impossible to save and thus guaranteed to default, and that the inevitable European default would then lead to demands for payout that were – again – mathematically impossible? We are talking tens if not hundreds of trillions of dollars. We are talking multiples of the size of the entire economy of the U.S. - and that is just the exposure of ONE BANK (i.e. JPM @ $78TTT). There is no possible way to payout on that. It seems to me that these CDS writers knew from the start that they would never have to payout. They knew that their people in the ISDA would never declare a default, but would always leave some trifling payout to “legally” skirt default. If it ever got to the point that there was a full default, World War 3 would be the result and thus the entire point would be moot. The bankster oligarchs would at that point be moving fully to declare a new totalitarian world government and abolish and seize all private property. Game over.
One can only hope...
Yes. Money does not disappear. Value is lost as a result of a TRANSACTION, with a clearly defined buyer and seller. In this case the malevolent actors at MFG stole the asset at one price for the purposes of generating cash which they owed to another. They sold it at a (lower) price to Soros et al in order to generate this cash. This is exactly the way a common thief deals with his "fence". The outcome is the same: value is destroyed.
Well said. Arrest Jon Corzine. Impeach Scumbama.
The John Quincy Adams Dewey Foundation education programming the masses scam:
(Teach them to read while they're young and they'll believe anything they read as adults.)
Right up there with the corporate monopoly media scam:
(Trailer trash believe anythiong they see on TV.)
The bottom line:
More Derivative Bank and Broker BQ's beside 0MFG coming:
http://silversenator2012.blogspot.com/2012/01/more-bqs-coming.html
Stolen.
Just like the future for our kids and grandkids.
But one of MF Corzine's condos gets "vaporized":
http://www.halliburtonhomes.com/CustomContentRetrieve.aspx?ID=4156027
No rugs or carpets.....makes it easier to slither around in!
Couple beers and id bang his realitor. Bet shes got fakies too!
I'd hope you would bang her like every hyphenated last name having woman deserves... although, I'm not sure why you'd need a couple beers.
You need two beers to hit that? She has a better rack than Plazidow's starter icon.
"... I expected better from the WSJ..."
bbbwwwaahahahahahhahahhahahahahahhahahahahaa!!!!
you stupid bitch....the wsj is a bankster tool to fuck fucktards like you who have fuck me written all over their foreheads - accompanied by a 2 story dunce cap....
we are living in the new world order and the little people are there to be fucked.....you will not see a dime of your money all in all sincerity you have my sympathy.....
i would file a class action suit on behalf of all losers and seek exceptional punitive damages....i would also file a motion to have corzine's corporate legal protection removed to open personal lawsuits against the cunt.....
Yes, yes and yes.
He does have my sympathy for sure as he will NEVER EVER EVER SEE a fucking dime of his money back. I think Corzine will become president now.....FUCKED, FUCKED AND FUCKED.....
It's beyond comprehension but this is how it all starts....FUCK THE CLASS ACTION LAW SUIT THAT WILL GO ON FOR DECADES AND ENRICH THE COCKSUCKING LAWYERS.....that is a bigger joke.
Nothing a 1.5 foot cast iron pipe wont fix.....I gots one in my back yard.
The saddest part of this joke is they will just "unload the barrel and laugh, cause im putting lead in your mother fucking ass" (Easy-E).....they will just laugh at this guy....
and then do it again.
Kenny Rogers said it best...."every account (sic) is a winner, every account is a loser AND THE BEST YOU CAN HOPE FOR IS TO DIE IN YOUR SLEEP"....
Sorry cock suckers win again....
Easy-E & Kenny Rogers quotes back-to-back? Hell you should have thrown in some Metalica for good measure, and covered all your bases.
KILL EM ALL!!!!!!
Thanks....forgot the most important quote!!!!
Corndog!
Today's Bloomberg reports:
A Hoboken, New Jersey, penthouse belonging to Jon Corzine, the former chairman of bankrupt MF Global Holdings Ltd (MFGLQ)., is on the market with a $2.9 million asking price, 11 percent less than Corzine paid in 2008.
Looks like that guy can't invest in housing any better than he did in European bonds, but there is close to 3% of MFGs customer looses covered...
nfp
Every one who lost money at MFG should file a lien on Corzine's penthouse. If NJ is like most states anyone can file a lien on anyone elses property. Then Corzine has to clear up all the liens (valid or not) prior to selling it. A few thousand liens would make for a nice title report.
Better check that decimal point! The Don can buy 400 of these with his vapor.
+55
"I expected better from the WSJ. ". Made me laugh. The WSJ is just another worker bee in the bankster hive.
the lawsuit isn't going to get you any further than whining about how the wsj lies for the bankers. they own the system, including the legal system.
Including the WSJ. Gina Rienhardt is the richest woman in Australia (iron ore). She is a major holder in a national television station and now is bidding for majority holder of the Fairfax newspaper in Australia, so that she can buy two or more board seats, giving her control of that news (propaganda) outlet. And he reckons that a letter of complaint is going to get him somewhere? There is only one way to stop this rot: mass denial of participation or a strike. Don't participate. Financial nymphomaniacs are going to get the obvious.
BRAVO
No, it was vaporized. Consider it a minor "glitch" to keep gold under $2000 and silver under $50.
FACE Bitchez
Can't thank Zero Hedge and its contributors enough for providing the truth for free, rather than having to subscribe to some WSJ rag just to get fed lies.
Keep it up
Sar-cosy responds to WSJ letter writer:
http://www.google.com.au/imgres?imgurl=http://mexalapotis.files.wordpres...'s%2Bsmallest%2Bviolin%26tbm%3Disch%26tbo%3Du&zoom=1&q=the+world's+smallest+violin&docid=GEtIqJMXwKMCVM&sa=X&ei=1GcoT7iKMaSZiQe636zNAg&ved=0CEIQ9QEwAw&dur=3437
+1. In fact, I'm going to donate again to ZH now. Thanks, TD!!!!!
"fed lies."
I get it, BT! It's all lies, and they all begin with the Fed!
Amen Bumblebee -)
And good luck to Stanley Haar. Hope you get your funds back and the criminals involved go to jail.