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MF Global Trustee Speaks: It Was All Corzine's Fault

Tyler Durden's picture




 

In the somewhat unsurprising conclusion of former FBI Director Louis Freeh's investigation into the MFGlobal collapse, Jon Corzine's aggressive bets on European sovereign debt led to the firm's dramatic collapse. The 124 page report (below) is extensive; noting, as Reuters reports, that Corzine's single-handed "negligent conduct" contributed to the company's failure. It was also "almost impossible to properly monitor the liquidity drains... caused by Corzine's proprietary trading strategy," the report said, adding that the "glaring deficiencies" in the firm's internal reporting were, "long-known to Corzine and management, yet they failed to implement sufficient corrective measures promptly." The investigation, based on interviews with former MF Global employees, board members and the review of hundreds of thousands of documents, concludes, "The risky business strategy engineered and executed by Corzine and other officers and their failure to improve the company's inadequate systems and procedures so that the company could accommodate that business strategy contributed to the company's collapse." Obviously, Corzine has denied any wrongdoing.

Via Reuters,

Jon Corzine's aggressive bets on European sovereign debt while head of the MF Global Holdings Ltd brokerage led to the firm's dramatic collapse in 2011, according to a report by the bankruptcy trustee.

 

Former FBI director Louis Freeh acknowledged that a slow U.S. economic recovery had played a role in MF Global's woes, but he said "negligent conduct" contributed to the company's failure.

 

...

 

"The risky business strategy engineered and executed by Corzine and other officers and their failure to improve the company's inadequate systems and procedures so that the company could accommodate that business strategy contributed to the company's collapse," Freeh wrote in the 124-page report.

 

...

 

Freeh's report found MF Global management ignored the hedging recommendations of its chief risk officer, Michael Stockman, and lacked the controls to monitor its cash on a real-time basis.

 

The weak reporting system also prevented the company from knowing that cash from segregated customer accounts was being used to meet margin calls tied to MF Global's own bets on the sovereign debt of countries such as Portugal and Ireland.

 

"These glaring deficiencies were long known to Corzine and management, yet they failed to implement sufficient corrective measures promptly," the report said.

 

Freeh's responsibilities include pinpointing possible legal liabilities of the management, and the singled out the "failures" of Corzine, former chief operating officer Bradley Abelow and former chief financial officer Henri Steenkamp.

 

...

 

On Friday, U.S. Bankruptcy Judge Martin Glenn will be asked to approve MF Global's plan of liquidation. General unsecured creditors of the holding company are expected to collect between 14.7 cents and 34 cents on the dollar of what they are owed, according to court documents.

 

Full Freeh report below:

Freeh Report on MFGlobal

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Thu, 04/04/2013 - 14:06 | 3408974 Ancona
Ancona's picture

He needs to be found and defenestrated from a tall building.

Thu, 04/04/2013 - 14:08 | 3408992 achmachat
achmachat's picture

I see the bus hasn't left the station yet... more time to throw a bunch of them under the bus!

Thu, 04/04/2013 - 14:09 | 3408995 HulkHogan
HulkHogan's picture

Or hung from a tree.

Thu, 04/04/2013 - 14:12 | 3409012 Abraxas
Abraxas's picture

(Not aimed at Mr. Hulk) Why so many here who apparently get what's going on, still cling to ideological constructs, with  fervor of a Bolshevik. The "right" of corporation to exercise its economic power without restraint is construed by the partisans of the "free market", as a form of freedom, a political liberty implied presumably by the right of individual citizens to own and use property. An idea of Free market is not any better than Comunism.

Thu, 04/04/2013 - 14:16 | 3409040 RacerX
RacerX's picture

It's the fact that Mr. Corzine illegally used OPM (Other People's Money) as his risk capital, unbeknownst to said OP. Additionally, when he fucks the duck, he walks away--not just scot-free, but seemingly whisked away in a golden chariot.

The beef is that corzine-types don't play by the rules, get caught, and still walk away with seemingly no penalties. And wipe out everyone else in the process.

Lather rinse repeat; FNMA, BigBanks, etc etc.

I'm all for bringing back a good old-fashioned lynching for folks like him.

Thu, 04/04/2013 - 14:23 | 3409078 camaro68ss
camaro68ss's picture

Get Corzine POWNED bitchez

 

Steal Bread, go to jail for 6 months. Steal billions, get an invite to the white house to shear your secrets

Thu, 04/04/2013 - 14:33 | 3409141 fuu
fuu's picture

Anyone seen or heard from Edith O'Brien lately?

Thu, 04/04/2013 - 14:36 | 3409159 francis_sawyer
francis_sawyer's picture

<Edith O'Brien?... she owes me money>

Thu, 04/04/2013 - 14:42 | 3409186 redpill
redpill's picture

Heads, the Hon. Jon Corzine wins.

Tails, you lose.

Thu, 04/04/2013 - 14:57 | 3409274 HoofHearted
HoofHearted's picture

Free Jon Corzine.

Oh shit. I meant Fuck Jon Crozine.

No, I haven't forgotten about you, Bernanke.

Thu, 04/04/2013 - 15:17 | 3409370 ConfederateH
ConfederateH's picture

the audacity of greed

Thu, 04/04/2013 - 16:39 | 3409694 flacon
flacon's picture

Vice President talks about an American Bank Holiday - and Jon Corzine was the saviour:

 

VP Biden says he called Jon Corzine for advice

http://www.youtube.com/watch?v=d-cLZai63GA

Thu, 04/04/2013 - 16:41 | 3409696 ihedgemyhedges
ihedgemyhedges's picture

Sniff sniff.  What's that I smell?  A pardon in January 2017?????

Thu, 04/04/2013 - 15:01 | 3409288 jeff montanye
jeff montanye's picture

In some ways, as much as I consider myself a Democrat, I would say that the most prompt and vigorous response to fraud we’ve seen in the last 20 years has been the Bush administration’s crackdown on Enron, Tyco and Worldcom following the revelations of these massive frauds earlier in the millennium. Despite campaign contributions, John Ashcroft’s Justice Department went after these people and put the resources and set up the task forces and brought them to justice, which is what we’ve not seen in the last five years.  -- jim chanos, alternet

Thu, 04/04/2013 - 19:13 | 3410261 bonin006
bonin006's picture

Ashcroft is the guy Bush had to fire for having too much (ie any) respect for the constitution

Thu, 04/04/2013 - 15:30 | 3409423 smlbizman
smlbizman's picture

man, i am really confused....i know freeh is one of them, and i know corzine is one of them....so it will either end were corzine is found stupid, not dishonest (wink)...or he is charged, found guilty than pardon.......their is no way he acted alone...so this is the dog and pony show that  will be presented to the stupid zerohedgers (right mario?) who have no idea how things work. and of course  we will be paying the millions upon millions of frns that it will take to prosecute and defend him with the most expensive lawyers known to man...of course i could be completly wrong

Thu, 04/04/2013 - 15:41 | 3409475 spinone
spinone's picture

I bet Freeh and Corzine are having a big laugh about it right now.

Thu, 04/04/2013 - 16:57 | 3409743 Carl Spackler
Carl Spackler's picture

Right, they shook hands and simultaneously said "well done."

Freeh then said to Corzine, got any other things I can help you with, Jonny ?

Thu, 04/04/2013 - 15:19 | 3409382 dark pools of soros
dark pools of soros's picture

zerosum... his 'loss' goes to who's gain?  the whole gang's fund on the other side of that 'risk'

 

there was no risk.. he bascially Western Union'd it to his gang of thieves

Thu, 04/04/2013 - 18:19 | 3410097 geologyguy
geologyguy's picture

& not a finger was raised by any politician. 

I hope he sticks around whatever hole he is in, because I'd take my time on that guy.

Thu, 04/04/2013 - 14:26 | 3409097 Stackers
Stackers's picture

"Dont know where the money went"

What is the punishment for Congressional perjury again ?

Thu, 04/04/2013 - 14:31 | 3409120 Bay of Pigs
Bay of Pigs's picture

Its high time to FREE JON CORZINE!

Oh wait...

Thu, 04/04/2013 - 15:14 | 3409367 Jonas Parker
Jonas Parker's picture

Yes, free from these earthly bonds so his spirit can... well... bring the burn ointment Jon...

Thu, 04/04/2013 - 15:22 | 3409389 dark pools of soros
dark pools of soros's picture

even if he goes in for a showtime jail stint he'll get pardoned in 3 years max

Thu, 04/04/2013 - 19:13 | 3410263 just a dude
just a dude's picture

Kind of like what Holder is attempting to do for Andrew Skilling, yes?

Thu, 04/04/2013 - 14:32 | 3409133 johnQpublic
johnQpublic's picture

a job at goldman sachs or other similar company, campaign fund scrounger

there are other punishments but i wont bother to list them

Thu, 04/04/2013 - 14:31 | 3409119 James_Cole
James_Cole's picture

The beef is that corzine-types don't play by the rules, get caught, and still walk away with seemingly no penalties. And wipe out everyone else in the process.

Welcome to life, see: history.

Thu, 04/04/2013 - 16:46 | 3409707 Optimusprime
Optimusprime's picture

The rules do not apply to Jews.  Had Martha Stewart been Jewish, she would never have been prosecuted.

Thu, 04/04/2013 - 21:51 | 3410686 Buck Johnson
Buck Johnson's picture

This guy used segregated accounts, he was caught essentially red handed.  He should be sharing a cell with Madoff and even Madoff is saying the banks knew what he was doing.

Sat, 04/06/2013 - 17:51 | 3417105 Blankenstein
Blankenstein's picture

He gets away with it because our idiot politicians let ass-faced bastards like Corzine call the shots for our country. 

 

http://www.youtube.com/watch?v=xm3VMrKqJSA

Thu, 04/04/2013 - 14:20 | 3409043 NotApplicable
NotApplicable's picture

This kind of scam can only happen under the blessing (read: protection) of the apparatus of state. A free-market would've blown any entity acting "without restraint" out of the water long before this level of damage could ever be achieved.

You seem to forget that the right of corporation is also a privilege of state.

As for the "why do we hold such convictions?" There's this thing called ethics and morality that absolutely depend upon people having free choice to exercise. Take away any freedom under the guise of protection, and it instantly corrupts the entire system, protecting those who hold power over it.

Thu, 04/04/2013 - 14:19 | 3409063 Abraxas
Abraxas's picture

Not a big fan of governments, either.

Thu, 04/04/2013 - 14:27 | 3409105 Pure Evil
Pure Evil's picture

And, now, if we could only get to the bottom of 9-11 and the collapse of Bld. 7 as succinctly.

Thu, 04/04/2013 - 14:34 | 3409155 James_Cole
James_Cole's picture

This kind of scam can only happen under the blessing (read: protection) of the apparatus of state. A free-market would've blown any entity acting "without restraint" out of the water long before this level of damage could ever be achieved.

You've got to get your definition of free market narrowed down. As you go on to say...

You seem to forget that the right of corporation is also a privilege of state.

Under what system are you advocating 'free market' economics? Usually in the US when someone is talking about 'free markets' they are referring to as-associated with capitalism. Capitalism is a state-based system. 

If you're talking about free markets under some sort of anarchy based system you're talking a very very different thing. 

Thu, 04/04/2013 - 15:24 | 3409400 Squiddly Diddly
Squiddly Diddly's picture

1.6 billion rounds of "practice ammunition" says it ain't gonna happen.

Fri, 04/05/2013 - 18:32 | 3414535 ich1baN
ich1baN's picture

The idea of "crony" capitalism is no better than Communism. 

A truly functioning free-market does not have MFGlobals and PFGBest's occuring at heartbeat frequency.

Yes, it is true in a free-market that frauds can happen, but that is a reflection of the mores of the time and of the ability of people who are supposed to be held reponsible. 

What is different from a free-market and a crony-capitalist market is that in the free market, people like Corzine would be found guilty and the maximum allowable punishment would be enacted to prevent further frauds of this nature from happening.

Corzine was the product of a vast and swift revolving-door. It seems the guys pushing this door the most are the ones responsible for the majority of financial crimes committed in a crony capitalist system.

A return to sound money, glass-Steagall, and commitment to budget surpluses with a fair-flat tax environment would ensure the best functioning free-market without the luxories enjoyed by the top banking elites and plutocrat class that can script their destiny through the ink of a pen or a click of a button. 

Thu, 04/04/2013 - 14:16 | 3409024 hedgeless_horseman
hedgeless_horseman's picture

 

 

All this about Corzine is probably true.  However, it does not change the fact that receivers, trustees, judges that appoint them, and lawyers for the receivers and trustees are all members of the absolute lowest form of racket on the planet.  The customers and shareholders of MFGlobal will likely never see a dime of their money due to this racketeering.

Thu, 04/04/2013 - 14:18 | 3409049 ParkAveFlasher
ParkAveFlasher's picture

Don't forget the cops who protect them and the judges that turn the other cheek.

Thu, 04/04/2013 - 14:27 | 3409100 Dr. Venkman
Dr. Venkman's picture

I resemble that remark! (+1 for you anyway)

Thu, 04/04/2013 - 14:17 | 3409044 Vashta Nerada
Vashta Nerada's picture

Wouldn't you know they blame it on the guy who has a get out of jail free card.

Thu, 04/04/2013 - 17:44 | 3409988 asteroids
asteroids's picture

Would anyone shed a tear? No, I bet everyone on ZH would cheer.

Thu, 04/04/2013 - 14:08 | 3408997 krispkritter
krispkritter's picture

124 pages to say GUILTY!?  

Thu, 04/04/2013 - 14:20 | 3409060 tickhound
tickhound's picture

 

 

Guilty?  SHEEEEit.  Apparently many here including the trustee DON'T UNDERSTAND...

Corzine is within the inner circle of the PRIESTHOOD.  Therefore, he's untouchable.  A fucking HERO to the religion.  He communes with PONZI.

Writing your congressman DOES NOT MATTER. 

12 reasons why... 

1.  He's a former Goldman CEO

2.  Former US Senator

3.  Former US Governor

4.  Friends in the CFTC

5.  Friends in the SEC

6.  Friends at the FED

7.  His crime involves stealing over $1,000,000,000... "Felons" steal much less.

8.  His crimes are too complicated for average citizens to understand

9.  Wealth transfer is only deemed outrageous when the lower class is the recipient

10.  An investigation that runs too deep could disturb markets

11.  A lead Obama fundraiser

12.  And he's .............

 

Thu, 04/04/2013 - 14:38 | 3409172 francis_sawyer
francis_sawyer's picture

FREE...

~~~

Unless you want him as a guest at your kids Bar Mitzvah... That'll cost ya...

Thu, 04/04/2013 - 15:43 | 3409482 spinone
spinone's picture

........in the tribe, I know, I know.

Thu, 04/04/2013 - 16:26 | 3409629 flacon
flacon's picture

Corzine claims that his ancestors were Italian and French. 

Thu, 04/04/2013 - 16:32 | 3409665 francis_sawyer
francis_sawyer's picture

...and?... That changes anything?...

Thu, 04/04/2013 - 20:24 | 3410447 Miffed Microbio...
Miffed Microbiologist's picture

Actually tickhound, the key point in your list lies with number 8. This is why there is no justice and why that man will walk with complete impunity until his death. An alive sentient population would never allow such a deeply depraved individual escape punishment. There lies the rub. Unfortunately to wake up people today one must resort to extreme measures: starvation, homelessness en mass, in your face FEMA camps etc. This seems unlikely in the near future. The few who are awake are just to few to make any meaningful change. The masses have the numbers but they have relinquished their powers long ago.

Yesterday I accidently left the door open to my chicken coop and coyotes had run off with 4 of my laying hens. Furious I grabbed my rifle, tossed a hen outside the coop and angrily laid in wait for them to show up again so I could blow them away. After 2 hrs shivering in the cold I finally came to the conclusion that I was being an idiot. There will always be coyotes out there waiting to take advantage of an opportunity. That is just the nature of a coyote. It simply, by its nature, will never respect my property. The fault lay with me for failing to close the gate to the coop. That's not to say if I had caught them in the act and had a weapon I wouldnt have shot them. I think knowing the nature of the beast (bankster) and protecting oneself against their insatiable lust for power and money is more effective at the present time.

Miffed;-)

Thu, 04/04/2013 - 14:24 | 3409088 McMolotov
McMolotov's picture

They left out the part that says, "Mr. Corzine could not be reached for comment because he was blowing through millions of dollars while molesting small boys in Thailand."

Thu, 04/04/2013 - 14:53 | 3409241 Dr. Venkman
Dr. Venkman's picture

Seems more like 124 pages to limit claims against Corzine to those of a civil nature -- the lawyers might be gearing up for a breach of duty case against Corzine -- which is nearly impossible to win on these days. . . but fees are fees.

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