3 Months After The MF Global Bankruptcy, We Find That $1.2 Billion (Or More) In Client Money Has "Vaporized"

Tyler Durden's picture


On the three month bankruptcy anniversary of the company whose rehypothecation gimmicks will one day be seen as a harbinger of everything that is  broken with the multi-trillion ponzi system, but not just yet despite loud warnings otherwise, we are getting close to a final verdict of where the $1.2 billion (and possibly more as originally predicted by Zero Hedge - see below) in commingled client money may have gone. Note the use of the passive voice because using the active, as in money that MF Global executives stole from clients, is prohibited in a legal system in which nobody goes to jail for something as modest as $1.2 billion in theft. That verdict? "Vaporized." No really (and yes, in the passive voice of course). From the WSJ: "As the sprawling probe that includes regulators, criminal and congressional investigators, and court-appointed trustees grinds on, the findings so far suggest that a "significant amount" of the money could have "vaporized" as a result of chaotic trading at MF Global during the week before the company's Oct. 31 bankruptcy filing, said a person close to the investigation." Uh huh... Because money simply vaporizes. Which means one of two things: i) the "vaporization" is merely the phrase that so called investigators use to avoid the far more troubling sounding "stolen" as it would imply guilt, something which the former NJ governor and Goldman CEO (and not to mention JP Morgan which most likely was on the receiving end of the $1.2 billion + transaction) will, under guidance from counsel, sternly disagree with, or ii) the capital markets are such an unprecedented and manipulated fraud, that nobody has any clue at any moment, where any client money is, and that any residual capital still "invested" in mythical representations of "assets", which are likely rehypothecated so many times, that not even Bank of America's robosigning division would have a clue where to start unraveling, will promptly be converted into tangible manifestations of capital. So when someone asks what happened to stock market volume, and to investor confidence in the "stock market" feel free to use just that phrase: "it vaporized."

WSJ "explains" how $1.2 billion "vaporized"

Many officials now believe certain employees at MF Global dipped into the "customer segregated account" that the New York company was supposed to keep separate from its own assets—and then used the money to meet demands for more collateral or to unfreeze assets at banks and other counterparties as they grew more concerned about their financial exposure to MF Global.


Investigators also are examining other scenarios that have gained traction in recent weeks, such as the possibility that MF Global suffered steep losses on investments made using customer money. Officials investigating the case have looked into whether such investments were appropriate under rules at the time.


As money poured out of MF Global, much of it likely passed through J.P. Morgan Chase & Co. and other banks where the securities firm had accounts, as well as trade-clearing partners such as Depository Trust & Clearing Corp. and LCH.Clearnet Group Ltd., people familiar with the matter said.


Those companies have denied being knowingly in possession of any missing MF Global money, and any efforts to make them fill the hole would face daunting hurdles. And because the firms usually were middlemen between MF Global and other counterparties, the funds they touched were then scattered widely, complicating the search.

So one hand, nobody at MF Global was responsible because every member of lower, to middle to upper management was responsible (and certainly not Jon Corzine), secondly, not one regulator was responsible, because every regulator was equally oblivious of the grand theft occurring right under their noses. Finally nobody on the receiving end of this fund flow was responsible, as the money could have ratably gone to one of an infinite number of destinations. And here we were thinking that dilution is only applicable to what the central banks do to their currency. Little did we know that it is the de facto global modus operandi for the systemic fraud endemic in modern finance, whereby not one person is held accountable, as otherwise everyone would be held accountable.


Finally, it is becoming once again apparent that the final tally will be at least $1.2 billion. To wit:

But hundreds of millions of customer dollars are potentially snarled in litigation with other parts of MF Global, including its U.K. arm, and U.S. officials might never be able to recover those funds. As a result, Mr. Giddens believes the shortfall is at least $1.2 billion, though regulators at the Commodity Futures Trading Commission and CME Group Inc., parent of the Chicago Mercantile Exchange and New York Mercantile Exchange, have estimated the total is smaller than that.


And from Zero Hedge November 1:

Doing some quick inverse addition and we get a (w)hole of $5.45 less $2.5 less $1.5 or $1.45 billion. In other words, the theft by MF Global was not stealing hunderds of millions form its customers: it has stolen a whopping $1.5 billion! For those confused, this is not a rogue loss of $1.5 billion, something which was enough to send UBS' Kweku to prison. This is outright theft resulting from illegally commingled accounts. Our only question is will $1.5 billion in theft be enough for the first real perp walk of an Obama-friendly Wall Street executive?

It is becoming increasingly difficult to even care anymore; it is also becoming increasingly certain that any client capital in the "markets" will sooner or later disappear in one of many comparable bankruptcies, and there just like here, nobody will be held accountable, as holding someone accountable will actually expose to everyone the whole scam that is modern ponzinomics, in which binary representations of money in the forms of ones and zeros, not only don't exist in the real world, but is in effect collateralized by the same ever smaller pool of dwindling hard assets. Not only that, but someone may actually, gasp, go to jail.

And that is not allowed under a legal system which is in bed with the very financial system that preserves it and funds it.

Ironically, it is the conspiracy theory movie, "The International" that captures precisely the interplay between the terminally broken and beyond corrupt legal system and modern financial markets:

Justice is not possible.


Why not?


Because, Agent Salinger, your idea of justice is an illusion. Understand the very system that you serve and protect will never allow anything to happen to Skarssen [i.e., Jon Corzine] or the bank [i.e., insert any current bank]. On the contrary. The system guarantees the IBBC's [i.e., insert any current bank] safety because everyone is involved.

And that should answer all questions about how $1.2 billion can simply "vaporize."

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Mon, 01/30/2012 - 01:01 | 2108673 GenXer
Mon, 01/30/2012 - 01:11 | 2108688 SGS
SGS's picture

Blythe has vaporized to DBank baby. 

Mon, 01/30/2012 - 01:13 | 2108691 Tyler Durden
Tyler Durden's picture

No she wasn't. Google is your friend. Masters is simply replacing DB's Faissola as head of the GFMA:

From the FT:

Blythe Masters, the JPMorgan commodities boss who becomes the GFMA’s
chairman, said it was a logical next step following the evolution of
regional trade bodies.


The GFMA encompasses the Securities Industry and Financial Markets
Association in the US, the Association of Financial Markets in Europe,
and Asifma, their Asian sister organisation.


“In the past, there were fragmented trade associations reflecting
particular regional issues, or issues in certain asset classes or within
sub-parts of firms,” said Ms Masters.


“But now the regulatory agenda in particular is more global.”


Ms Masters, who shot to fame as her derivatives expertise at
JPMorgan put her at the heart of the first wave of the global financial
crisis, is a higher profile appointment than her opposite number at
Deutsche Bank, Michele Faissola, whom she replaces,
although Mr Faissola is now tipped as a potential successor to Anshu Jain as head of Deutsche’s investment bank.

Mon, 01/30/2012 - 01:32 | 2108715 The Big Ching-aso
The Big Ching-aso's picture



Well, if there was ever a time for money to vaporize it's now.  The shit's becoming less valuable than steam in a Greco-Roman bathhouse.

Mon, 01/30/2012 - 01:56 | 2108747 dwdollar
dwdollar's picture

Just think... you have to subscribe to the WSJ to read that fantastic piece of investigative journalism... Vaporized... OMFG

Mon, 01/30/2012 - 02:28 | 2108792 redpill
redpill's picture

The money didn't vaporize.  They lost it settling margin calls and doubling down on bad bets.  The counterparties got it.  The itsy bitsy problem was that the money didn't belong to them.  Oops.

Mon, 01/30/2012 - 02:32 | 2108801 Harlequin001
Harlequin001's picture

"Many officials now believe certain employees at MF Global dipped into the "customer segregated account""

It's not stealing. Sorry M'Lud, I didn't steal his money, I just 'dipped into' it. 

can I go now...

Mon, 01/30/2012 - 06:04 | 2108920 TheFourthStooge-ing
TheFourthStooge-ing's picture

Tyler said:

Little did we know that it is the de facto global modus operandi for the systemic fraud endemic in modern finance, whereby not one person is held accountable, as otherwise everyone would be held accountable.

We're going to need a lot of rope, a whole lot of rope.


Mon, 01/30/2012 - 08:14 | 2109003 El Hosel
El Hosel's picture

Protesters are being held accountable, 400 arrested in Oakland over the weekend.

Mon, 01/30/2012 - 09:50 | 2109240 ATM
ATM's picture

That's all just scripted theatrics. They want to create stoke the anger and indignation to light the spark that sets off the chaos that will form the perfect atmosphere for the assumption of all power.

And by "they" I mean TPTB as well as their little idiot minions in the occupy movement who don't see thay are being played like a skin flute.  

Mon, 01/30/2012 - 12:58 | 2109972 XitSam
XitSam's picture

MF was a profitable test run. When the riots commence, trillions will be transferred to bankster accounts. "Gee, all the evidence burned when they set fire to our office."

Mon, 01/30/2012 - 09:40 | 2109211 Kobe Beef
Kobe Beef's picture

How about gasoline? Faster, wider application against institutional targets. Wow, looks like your bank headquarters just vaporized, hmm?

Mon, 01/30/2012 - 03:49 | 2108848 piceridu
piceridu's picture

In a serf's world, receiving stolen property is still a crime. Get caught with a TV that "fell off a truck" and they'll send in a S.W.A.T. team.

Mon, 01/30/2012 - 08:27 | 2109016 a growing concern
a growing concern's picture

Oh, and the SWAT team?  They will kill you.  Even if they knock down your door by "accident" and you're completely "innocent".  They don't really give a flying "fuck".  So just relax and wait for your door to be shot in.



Mon, 01/30/2012 - 09:52 | 2109246 Calmyourself
Calmyourself's picture


Protect and serve is over, the police have been militarized.  The pols know soemthing is coming, say iran activates a few teams in the U.S. perfect reason for the sheep to urge Bammy to really grab some power.  Domestic police as well equipped as the armed forces, remember..

Mon, 01/30/2012 - 03:57 | 2108851 Transformer
Transformer's picture

It's like drummers in Spinal Tap.  Spontaneous combustion.

Mon, 01/30/2012 - 08:24 | 2109009 Element
Element's picture

Yeah, but even that left a little green globule

Mon, 01/30/2012 - 09:02 | 2109086 Abraham Snake
Abraham Snake's picture

As I recall, one of the [Spinal Tap] drummers died in a gardening accident, yet that is completely relevant to the missing account monies as inspectors claimed -the accident was best left unsolved-

Mon, 01/30/2012 - 09:31 | 2109183 blindfaith
blindfaith's picture




OK REDPILL...you have a bunch of physical gold locked up, so tell me how does an institution just vapirize physical gold in their trust?

I know someone who had physical gold with them and it is gone!  And, it wasn't a hand full of Gold Eagles either.

Mon, 01/30/2012 - 02:29 | 2108793 Harlequin001
Harlequin001's picture

Ha ha Ha. I'm going to try that one with the tax man. Sorry mate, vaporised. Can we forget about it now?

Mon, 01/30/2012 - 08:29 | 2109018 a growing concern
a growing concern's picture

"What?  You didn't get my check?  I sent it to you in March... Hmmm...  Must have vaporized.  I don't know what to tell you.  I sent it to you, and the money's just not there anymore.  Hey, don't sweat it, we'll try again next year, okay?"

Mon, 01/30/2012 - 08:34 | 2109023 Harlequin001
Harlequin001's picture

It's ok. I've got some customer accounts I can just 'dip into'...

It's ok, it's not stealing...

Mon, 01/30/2012 - 08:37 | 2109030 Harlequin001
Harlequin001's picture

Well would you believe it, they've all vaporised.

Who could possibly have foreseen that?

...If you need me I'll be in Hawaii... till the vapor runs out anyway...

which should be in about 400 million years...

Mon, 01/30/2012 - 11:14 | 2109534 Zero Debt
Zero Debt's picture

auuu I am ... am am am not in a position..gievn the number of transactions and know...anything specifically about the movement...eehmmm..any specific funds...


Mon, 01/30/2012 - 03:51 | 2108841 Hugh G Rection
Hugh G Rection's picture

 "Arghhhhhhhhh, all your goyim fiat are belong to us! Ughhh Arrrr, we are the disciples of the light bearer! The holy synagogue of Satan! Beasts of burden, Serve your dark master! We vaporize fiat, like we vaporize Gentile babies! Now attack Iran or we shall be forced to false flag you again!"

Mon, 01/30/2012 - 01:50 | 2108742 slewie the pi-rat
slewie the pi-rat's picture

blythe is so hot she could vaporize slewie!  L0L!!!

the money?

well, it was vaporized!  according to mrTylerDurden, a PD bank going tits up results in proton revesal, vaporizing the sheeple's money

trust me!

Mon, 01/30/2012 - 03:04 | 2108819 Cast Iron Skillet
Cast Iron Skillet's picture

lol - that dam proton reversal will get ya.

Mon, 01/30/2012 - 03:38 | 2108840 BorisTheBlade
BorisTheBlade's picture

money doesn't smell ... but it vaporizes. thin air, no less no more.

Mon, 01/30/2012 - 02:04 | 2108765 Yamaha
Yamaha's picture

Many years ago I had the opportunity to fly into Florida to interview Ted Bundy about a cold homicide case that we had reason to believe he committed and the only thing we wanted was to find the body and clear the case prior to his execusion. He offered possible locations but nothing was recovered.

Maybe Corrzine has the same problem - too many crimes and can't seem to remember one from the other. Like Ted he is offering bits of information to stay alive. I would have not lost a minute of sleep to see Bundy in the electric chair.

Mon, 01/30/2012 - 02:12 | 2108774 slewie the pi-rat
slewie the pi-rat's picture

when i interviewed him he told me it was an acquired taste

Mon, 01/30/2012 - 02:21 | 2108785 LeBalance
LeBalance's picture

which was the acquired taste?

the killing?

the lying?


the chair?

Mon, 01/30/2012 - 05:35 | 2108905 Snidley Whipsnae
Snidley Whipsnae's picture

Perhaps a trip to Gitmo for Corzine and employees and a few months of waterboarding, sleep deprivation, and stimulation by electrical probes in various orafices might refresh their memory about what happened leading up to the 'vaporization'?

Financial terrorisim is still terrorisim. The NDAA could be interpreted to cover the MF Global financial terrorisim, could it not?

If we asked those that lost money with MF Global I feel sure they would agree with me...

Mon, 01/30/2012 - 08:40 | 2109036 a growing concern
a growing concern's picture

You have much to learn, Grasshopper.  See, only the little people go to jail.  The big people, who are campaign donors, pass Go, collect $200 million, and proceed directly past Jail to their high rise on Boardwalk.  That's how the game works.  

Mon, 01/30/2012 - 09:08 | 2109102 blindfaith
blindfaith's picture

actually, no...they won't/don't agree with you.  They are very quiet, did you notice?  Only the ones who are NOT investment and hedge funds are screaming.  The hedge, mutual, and other "fund' customers that FM had are very quiet...Why you ask?...because they don't want to piss off any other possible relationship they may have with another MF type primary dealers and be shut out of the system.

Poititicans don't squeel on their buddies, investment bankers don't either.

Mon, 01/30/2012 - 05:45 | 2108908 MsCreant
MsCreant's picture

You know how corporations hire talented hackers to try to hack into their securtiy systems, or hire thieves  to break in to their buildings and test them for their weak spots? Ms. Masters will be wonderful in her new spot...

Saw a funny ad this evening, declaring bank robbers had stolen millions of dollars last year, while identity thieves had stolen like 30 billion. They were selling an Identity Shield product.

We have vermin that vaporize trillions. What da ya got for that?

Mon, 01/30/2012 - 06:01 | 2108918 GeneMarchbanks
GeneMarchbanks's picture


Mon, 01/30/2012 - 06:03 | 2108919 Snidley Whipsnae
Snidley Whipsnae's picture

"We have vermin that vaporize trillions. What da ya got for that?"


I got phizz PMs... Whatcha got?

Mon, 01/30/2012 - 06:44 | 2108943 Snidley Whipsnae
Snidley Whipsnae's picture

"JP Morgan is attempting to widen their PM suppression influence into Europe. Sends Blythe Masters to Deutsche Bank. In a related story, Angela Merkel to campaign for Sarkozy"


Mon, 01/30/2012 - 12:12 | 2109750 Calmyourself
Calmyourself's picture

Not sure Google is my friend but research certainly is..

Mon, 01/30/2012 - 01:14 | 2108694 Schmuck Raker
Mon, 01/30/2012 - 02:05 | 2108766 slewie the pi-rat
slewie the pi-rat's picture

they hafta claw back the money from the banksters what jumped the line and done tooked it!  we can do this.  forenslewic accounting, BiCheZ!

Mon, 01/30/2012 - 11:50 | 2109567 ToNYC
ToNYC's picture

You will never see that statement, "the money vaporized", emerging from the FBI in full effect. Only fools can hear those words and be contented to inform a fake reality out of a confluence of ordinarily otherwise useful words. The conclusions are yours. Banksters shot the sheriff and let the deputies play house and talk on TV playing the moderate 80% being taken to the cleaners.

Mon, 01/30/2012 - 21:22 | 2111459 Atlantis Consigliore
Atlantis Consigliore's picture

Its vaporized,  hah hah hah hah hah. 


seg funds, ha ha ha,


regulators.  hee hhee hee.



Mon, 01/30/2012 - 01:02 | 2108674 wandstrasse
wandstrasse's picture

What we (bankers) created (money), we may also take away.

Mon, 01/30/2012 - 01:28 | 2108709 DeadFred
DeadFred's picture

Vaporizing is the opposite of printing. Must be pretty common in marginal reserve banking.

Mon, 01/30/2012 - 01:46 | 2108734 wandstrasse
wandstrasse's picture

marginal reserve banking

yesterday it was called 'fractional reserve banking', today it is called 'marginal reserve banking', tomorrow it will be called 'nothing banking'... wait... how would bankers call 'nothing'?... maybe: 'federal value asset banking'.

Mon, 01/30/2012 - 05:42 | 2108906 Snidley Whipsnae
Snidley Whipsnae's picture


Mon, 01/30/2012 - 07:33 | 2108973 TheFourthStooge-ing
TheFourthStooge-ing's picture

...or Fraudulent Reserve Gambling.


Mon, 01/30/2012 - 10:27 | 2109362 Dr. Kananga
Dr. Kananga's picture

LOL. At first glance, I though I read 'fractional reverse banking.'

Sometimes dyslexia tells the uncomfortable truth.

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