Reposted from our blog at EconomicPolicyJournal.com
Today's Senate hearings into the MF Global debacle demonstrate that conflicted Chairman (and ex-Goldman Sachs CEO) Gary Gensler is unwilling to provide anything more than mere lip service to the beleaguered customers whose funds remain inaccessible more than one month from the bankruptcy filing. Further, the issue of just why exactly SIPC, a securities resolution agency, is "managing" a futures commission merchant liquidation is among the more salient issues being completely ignored--except by various customer advocacy sites, such as MFGFacts and MyInvestorsPlace.
However, MF Global customers can take a bit of solace knowing they have a voice in front of Judge Glenn in the liquidation proceedings in the form of the Commodity Customer Coalition (#CCC) and its team of hard working attorneys (working largely pro bono, we might add). The synoganists remain Trustee James W. Giddens, earning $891 per hour and seemingly doing his best to drag out the proceedings, along with JP Morgan's attorneys, who are "dictating the agenda", according to CCC attorney James Koutoulas. [Update: for an expose of the conflicts of interest arising from Giddens' firm, Hughes Hubbard, vis a vis JP Morgan Chase, MF Global's largest creditor, see this excellent piece by MFGFacts.]
Is it too little too late? We hope not, as continuance after continuance increases the odds that looting of customer funds continues to this day. In a brief but compelling video (below), Warren E. Pollock of Inflection Points goes head to head with a few journalists outside the bankruptcy court in lower Manhattan, then conducts a candid, must-watch interview with Mr. Koutoulas [if you don't see the video embedded, click the link to the left]:
A few choice excerpts:
at 3:30 in:
Koutoulas: We were the first group to object to JP Morgan's use of the cash collateral. I think over the weekend, three or four other parties have joined our objection. And they keep continuing it...I'm going to get up and say, "Judge, there are some issues we have to talk about. We can't just keep continuing this ad infinitum." One of those is--you probably saw on ZeroHedge--the way that Order is written, it makes it possible...if these [repo-to-maturity] trades are still on, we have to know about it.
Pollock: You don't know if the trades are on right now--normally they'd have to wind down positions. But they could still be tapping into customer money at this very moment and there's no way to...recognize that.
Koutoulas: And if they did do that...that is the ultimate epitome of enabling someone to fall in love with their trade....These trades bankrupted MF Global, and the fact that there's even a possibility that they could still be on and still be using customer money to back them, it's beyond the pale.
at 5:25 in:
Koutoulas: The problem here is JP Morgan's lawyers are running the show...and they're running the agenda...Judge, the fox is in the hen house. JP Morgan cannot be dictating the agenda.
at 5:50 in:
Pollock: So that's why you're calling Jon Corzine a chicken on CNN?
Koutoulas: Yes...stand up...where's the money, Jon?
In the course of the hearing that followed, the Judge asked the CCC to file a motion to formally make its case against the JP Morgan super priority status and the continued trading of customer funds. A hearing was set for December [corrected: 9], 2011. Let's hope there's still money left by then.