The Final Straw? Jefferies And Six Other Banks Sued For "Fraudulent" MF Global Bond Issuance
Pick the odd one out of the following 7 banks, while in the process pointing out what they have in common: Bank of America Corp, Citigroup Inc, Deutsche Bank AG, Goldman Sachs Group Inc, Jefferies Group Inc, JPMorgan Chase & Co and Royal Bank of Scotland Group Plc. As it so happens 6 of the 7 are Bank Holding Companies, and have access to the Fed's various emergency facilities. The seventh, Jefferies, which a few years ago, boasted that it is now the largest remaining true investment bank after all its competitors had converted to BHC status, may soon regret it said that and did not join its peers. Why? For the same reason why on November 1, the day after MF Global filed for bankruptcy, we tweeted: "Here is why Jefferies is in deep doodoo: http://1.usa.gov/uNBhzq" The reference of course is to the now legendary prospectus for the MF Global 6.25% notes of 2016 that had the infamous Corzine key man event: "interest rate applicable to the notes will be subject to an increase of 1.00% upon the departure of Mr. Corzine as our full time chief executive officer due to his appointment to a federal position by the President of the United States and confirmation of that appointment by the United States Senate prior to July 1, 2013." At this point the only appointment Obama may give Corzine is that of a presidential pardon for a criminal felony offense (assuming of course Corzine brings a sleeping bag to Zuccotti square: the only offense for which he may ever be arrested). Alas, Jefferies, and the 6 other banks, do not have that luxury: as of late this afternoon, all six were sued by pension funds "who said the bonds' offering prospectuses concealed problems that led to the futures brokerage's collapse." Precisely as Zero Hedge expected. And unfortunately for Jefferies, this may well be the final nail in the coffin - because while the market had punished the bank for its Exposure, the biggest unknown in the past 2 weeks was whether and when it would be sued precisely for its MF Global liability. That time is now: next up - every single entity that was impaired in part or in whole as a result of the MF Global bankruptcy will follow suit and sue the same 7 banks... of which only Jefferies does not have the benefit of an infinite backstop.
More from Reuters:
Other defendants include several officials associated with MF Global, including former Chief Executive Jon Corzine.
Friday's lawsuit may be one of the earliest efforts for investors to recover money from relatively deep-pocketed defendants that they believe may share in responsibility for MF Global's October 31 bankruptcy.
Bank of America spokeswoman Shirley Norton, Citigroup spokeswoman Danielle Romero-Apsilos and Jefferies spokesman Richard Khaleel declined to comment. The remaining banks did not immediately respond to requests for comment.
According to the complaint, the registration statements and prospectuses for about $900 million of MF Global note offerings this year omitted how the company was using high leverage, investing heavily in risky European sovereign debt, and not properly segregating client assets from its own.
It said the seven banks helped draft the offering documents and sell the notes, collecting $21.2 million of fees, but that their "failure to conduct an adequate due diligence investigation was a substantial factor" in MF Global's collapse, as well as in defaults on the notes.
The lawsuit was brought by the IBEW Local 90 Pension Fund in Connecticut, and the Plumbers' and Pipefitters' Local #562 Pension Fund in Missouri, and seeks class-action status.
It seeks damages for investors between February 3, 2011 and October 31, 2011 in MF Global securities, including its 1.875 percent convertible senior notes maturing in 2016, its 3.375 percent convertible senior notes maturing in 2018, and its 6.25 percent senior notes maturing in 2016.
And to everyone who may have lost money or had their capital locked up indefinitely by the bankrupt firm, which we are 100% certain will see all of its valuable assets picked off by Goldman Sachs and JP Morgan, we suggest you familiarize yourself with lawsuit IBEW Local 90 Pension Fund et al v. Corzine et al, U.S. District Court, Southern District of New York, No. 11-08401 and enjoin it. Because one person who is getting very familiar with its contents right about now is Jefferies CEO, Dick Handler.
Incidentally, if Jefferies in big trouble, our other tweet from November 1 is also true: "And if Jefferies is in trouble, so is Fried Frank, underwriter counsel on the MF Global bond: http://t.co/L5vgjzqA"
So investment banks first; law firms next...Just how high will this debacle for the current administration reach we wonder?
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democRATcy?
This thing with Jefferies is really quite disturbing to anyone who knows the business. When they say that they were the last true investment bank that was not an idle boast. Their buy side sales group is over 2,000 strong and the best connected in the business for medium to small firm access. Their underwriters were honest (for underwriters that is) and they did a lot of good deals.
The fact that the dildoe CEO and CFO thought they had to go gambling in derivative instruments to keep the salaries up is an embarrasment. Those two and the board that supported them should be let go. But will that happen? Noooo. In this corrupt system they will likely be eliminated so there is no competition on the low end to the big banks and as a result there will be no capital formation for smaller concerns at all. Obama and that whole group has to go. They just have no clue what they are doing. If you were going to use government money to save a bank (never a good idea but if you were) it would be better to save Jefferies than either Bank of America or Citibank or that unspeakable piece of trash AIG. But the opposite of what is best will happen. Just disgusting.
What overseas entities will pick up on the business? There has to be a few out there that kept clean.
Swiss Nazi gold, dictator money banks?
Singapore now is the destination of choice for secret banking, so Singapore banks?
UK's fucked worse than NYC banks?
PIIGS banks?
state controlled Chinese banks?
KGB controlled Russian banks?
Latin drug cartel money Caribbean banks?
African banks?
I have more trust on Vegas Casino operators because they know mobs will put them in a bodybag if they lose mob money unlike banksters who get taxpayer bailouts.
Seriously? Jeffries CEO is really named "Dick Handler"? Guess he really got caught in a short squeeze.
A Rothschild proxy?
Obama and that whole group has to go.
You just don't get it do you? Presidential figureheads and their party affiliations have little to do with the real underlying power.
I say let Goldman start regulating the industry. Let's get it out in the open and visible to all. This way we can stop blaming the wrong entities for the destruction of this country.
Well, it's not like GS calls the shots it calls if you knwo what I mean CG. Some even might say the Carlyle group is way more powerful than GS. The Mafia is definitely more powerful (even on Wall Street) than GS.
The mafia runs the US. look at who is the top of the heap?
Google Mayer Lansky.... many things start to become rather obvious as it were.
ORI
caveat-emptor/
I love these Goldman sponsored blogs. The Vatican Mafia is the puppet master.... Bwahhhhhahah.
They do however produce catchy tunes:
http://www.youtube.com/watch?v=nnpEI3njoeo
Sing along
Austerity for you, pay that Jew confetti back.
Christianity had a thousand year, ban on this shit.
Even Islam forbids it.
Cooperative pacifist species, are killed to extinction.
Competition for dominance, is an evolutionary, mandate.
How else can we arbitrate DNA?
Fukushima was a black swan.
Let's all just totally panic.
And hope, this is as bad as it gets.
Sort of a catch twenty-two.
That was the dumbest fucking post, I've ever read.
You don't know how, mind fucked you are, do you?
Fuck you, you leave.
I missed the intent of the first line.
But that video is awesome. Well done fuu.
ORI
Interesting that you mentioned Meyer Lansky and the Vatican Groupie immediately associated it with the Vatican! Freudian slip? Inside knowledge? LOL!
Or: Have you two just become that predictable.
Thank you.
Right on fuu. I like the background singer who cannot get past 7, the skull spirals, the trance like beat.... Well done. Did Marla help?
Gold fucking stars for errbody.
Yes I applaud brilliance. The content not your youtube skillz.
<bow>
@ORI-I wouldn't argue that the Carlyle group is equally as powerful as Goldman Squid, but not any more so. These groups at the top are all on the same team, they just have different roles. Carlyle group pushes the military industrial complex and Goldman finances it.
I guess the Meyer Lansky reference is a bit vague. He sheltered money for the mob, but that is nothing compared to the trillion dollar enterprise of the Catholic church, for example.
Either way, I liked you post. We need more people to read outside the lines and think outside the box...
Thanks RTM. in truth, Lansky was the Drug Kingpin, plain and simple. Went seamlessly from alcohol to drugs. He answered (puportedly) to the Archbishop of NY, Vatican's man in the Big Apple (Hmmmmmm.....)....
Lansky worked for the Vatican. The partners of the Crown Corporation and joint owners of the Pentagon.
The US is the Jesuit army of a vengful god for the Vatican/bankers. A wet dream for them.
ORI
Obama is not a robot. He is possessed of free will you know. He could have lied to them to get into power and then used the power. Presidents used to do that. LBJ and Nixon come immediately to mind. George Herbert Walker Bush was also his own man. Reagan was a figurehead and that governement was run by Don Regan the chief of staff but at least he was from Mother Merrill and not Goldman. Not a jew in other words. Even G. W Bush told the bankers to shove it when they came to him to get bailed out on Delphi Automotive. He of course later capitulated when all the investment banks went tits up. Obama is just an empty suit. A shill that is acting as the political cover man for a bank heist. He doesn't even get the politics right. He's just an embarrasment. Nobody could be worse. Of course I used to say that about G.W. Bush as well.
Did you stop (start?) drinking? You are usually so full of shit, but I am now in complete support of what you're posting today. I applaud your cogent thoughts regarding the administration.
So, I'm not the only one to notice this change in personality. Good. Not sure if it is the drink, or lack thereof, but this is 2 in a row from PB that I agree with.....well, mostly. That part about George Bush senior being his own man I would argue with. Just because he was not owned by one set of crooks, does not mean he wasn't owned by another group. If were really his own man, that would just mean he controlled a very large gorup of theives himself.
Keep up the good work, Paul.
I respect George W. Bush in the sense that when he was elected, we all knew we were fucked. Sure enough, the country went to hell in a hand basket under his watch.
Obama on the other hand, campaigned on hope and change. Instead of hope and change, we got fucked. If I'm gonna get fucked, I'd at least like to know about it beforehand.
Thank you for your insight Paul B. I agree this is all just disgusting. And the fact that the only seemingly "decent" last true investment bank apes the big boys into unethical gambling waters only to drown due to lack of bail-outs is actually scary. At the end of the day the colluisive oligopoly becomes a monopoly with a few companies essentially operating as one with Teh Gov and Teh Fed.
Thanks again.
Disgusting? No.
Hope and change and record bonuses for criminals.
Tha criminal syndicate still washing their asses clean in the US Treasury fountains.
Failure rewarded is 100% by design, pay attention, and pay your taxes.
For all the wonderful reasons that Jefferies did the right thing and stands alone is precisely why the $2 April puts sport a huge open interest. Can't be having Saints in the Pirate's lair, but we can have a night of the long knives.
the good has to die young
AhmeexNAL?
Maybe they'll slap both wrists this time. Wouldn't that be something!
Complete and total worldwide collapse solves everything.
We should have a thread discussion sometime on the beauty of the barter system.
I'll give you a double roll of toilet paper for a gallon of gas, that sort of thing.
re: the fried frank reference in the post, the wikipedia entry for them notes douglas feith as an alum. that guy gets around. wish he were deep in an iraqi prison.
Barter System? What happens to government teat suckers and financial market parasites in a world where you have to produce something of value to stay alive?
The dodo comes to mind.
Russia defaulting because of America pushing the Red Army more into the Afghan War comes to mind.
Speaking to everything FUBAR..
BEWARE: Sit-down protesters may be a threat to public safety and are to cease and desist. There may be unconfirmed foreign operatives (tourists, foreign nationals, but let's call them possible terrorists until confirmed otherwise) amongst them, and none likely have police-approved press passes to film or release officially approved commentary.
http://www.wired.com/threatlevel/2011/11/nypd-occupy-press-pass/
http://www.cpj.org/2011/11/journalists-obstructed-from-covering-ows-protests.php
The squatting is clearly a health hazard and in violation of city public space by-laws, obstructing law enforment duties, and non-compliant with approved protest parameters.
http://alternativenewsreport.net/ows-screaming-peace-while-planning-for-violent-revolution-you-decide/stand-off-la/
Some are students prone to brain-washing by extremists. These young unstable elements are highly disruptive to you and the status-quo. Do not attempt to collude or be complicit with such individuals.
Failure to comply will result in harmonization.
Resistance is futile.
Yep, some of the young were brainwased by terrorist who told them to purchase homes (now underwater), contribute to lackluster 401k's, go to school and rack up debt and come out and get a good job flipping burgers, america is free yet there's a camera on every corner and if you get a parking ticket it could take 2 days of burger flipping to pay back. Yep, they were brainwashed alright. And now, they see that being a good citizen doesn't pay as Paulson, Dimon, Corzine, Mozillo, Fuld, Thain and the rest of the crew has clearly demonstrated.
Brains!
i wonder if I could barter my rectal gas?
Only to the greenies.
Well at least you're NOT blaming the kikes and the niggers for all this Mikey boy. Maybe you're still a racist fuck but at least you're drinking your morning SHUT THE FUCK UP joe and it's kinda sorta working and/or your retardo meds finally kicked in?!
Keep in mind there are over 400 active nuclear power plants in the world. If the system experiences a "complete and total worldwide collapse" then you are going to be counting on all of those plants either being properly shut down, or still operated in a safe manner. If anything goes wrong, we could be looking at Fukushima / Chernobyl times 100, and how much more radiation can the biosphere take before long-lived climax predators (like us) are no longer viable?
How about a bigger, tougher challenge, like finding a way to solve these problems and move forward without having to go through a collapse? There's an old saying about babies and bathwater that applies here...
Letting everything fall apart is easy. Building is harder, but has a lot more to offer.
Yeah, until there is banker perp walk day, all of this is just a waste of time and money. The rapists will keep on raping.
This is interesting... how things are just so interconnected.
Is it common to have this type of clause " +1% if Corzine gets dumped?" in a bond? Or is it some type of hubris...
No shit! How do you price that? Is that the 1% everybody's been talking about?
+ 1.5% if Corzine isn't satisfied and frowns
Now we know what the "key man" provision really meant...
http://tinyurl.com/87twu6g
That 1% was his nut on the kiting spread; he was shooting for the stars, dividing by almost Zero (0.01)
Go big swinging dick Jon, blow up Chi-town for the team. Weapon of Mass Financial Destruction.
Better call the Goldman guys for advice. Judd Gregg just traded in his people's pittance from the US Senate (N.H.) to get in the big GShow. You go Judd, great timing!
I just couldn't believe it either... those guys really think they are gods.
just more evidence of the incestuous relationship between wall street and the white house...i suspect corzine and the bondholders were fully expecting him to be appointed to federal office...secretary of the treasury no doubt
What makes you think he still isn't going to be Sec of the Treasury? The current one is a tax cheating crook so a precedent has been set.
No shit! This MF fuckup and theft might look good on his government job resume. I wouldn't be surprised if he runs for POTUS in 2016 or is made FED chairman.
i never said he wouldn't...carry on
100% AAA bullshit.
Wasn't it Rosenberg who remarked "there is seldom one cockroach in a messy kitchen" after the MF mess broke?
eh. think we're reaching on the implications here. we already know the Fed slammed the door on MFGlobal dooming both MF and Jeffries. So there was some type of "incestuous relationship." Sounds like Jeffries was doing their job to me--not well of course. Moreover rich people not merely reaching for yield but "soaring for it" are like Icharus going to have their waxen wings melted. The fact is companies that have tremendous free cash flows, great balance sheets, great access to credit at these low rates and have a "halo effect" of some sort still remain the place to be. The Fed has done their job and the proof in the quality of their work is the fact that an otherwise perfectly healthy Europe is/will be paying upwards of "who knows how much" in interest rates which will make what appears to be perfectly manageable debt loads perfectly insumountable. At the Federal level here in the USA this will not be the case due to the fact that the tax man has us perfectly by the balls over here. I still believe Meredith Whitney is vastly understating the problem in the municipal bond space given the combination of the is Administration's attack on "the rich" plus their constant harping about the need to take away the tax free status of much of the debt. We've already had not only the biggest but the most muncipal bankruptcies in our history these past two years. There will be many more on the way. This area of financing is not a transparent space. It's a disaster waiting to happen. Should oil surge say "$50 bucks a barrel on Monday" that's where America's "Greece" will located in my view.
I awarded you a + for the Icharus reference. Greek mythology is so today. My favorite is the myth that Greece will pay its debt. Forever Iceland. Know any Norse mythology?
well odin and his sons (thor, etc.) were well hung and the lady of the house was known as frigg. for other info consult "a volva": http://en.wikipedia.org/wiki/Odin
In norse mythology, great traders would pass beyond this veil to a special land reserved for the great, referred to as Valhalla.
When a trader died his corpse would be burned on a stack of assorted grade muni and corporate bonds in a 1937 Chris Craft runabout in a fjord.
If no bonds were available for the pyre, gin would be used, and if a boat could not availed, they would be lashed to a sinking index fund.
See "Ancient & Modern Norse Trade Routes & Bond Trades - 1962 by -Bjorn Bernanke"
Thank god they called John...he knew what to do.
Meanwhile, Fox Business is reporting that Corzine's personal wealth has taken a big hit, estimating his net worth to be down to $53 million, before legal fees, and not counting any personal investment losses that Fox says it is believed Corzine suffered.
Oh but I bet his wife just got very wealty....somehow she made a few hundred million somehow in the last two months I bet...wink wink....that is what Bernie Madoff tried to do and so will John....
The wives club!
The Real Housewives of Wall Street Why is the Federal Reserve forking over $220 million in bailout money to the wives of two Morgan Stanley bigwigs?Read more: http://www.rollingstone.com/politics/news/the-real-housewives-of-wall-street-look-whos-cashing-in-on-the-bailout-20110411#ixzz1eA1oi94D
You can't make this shit up. Every time you try to satrize it, the truth is more absurd than any fiction you could imagine.
Welcome to the 99% /Sarc
It's Jon ... Please don't insult the Crapper fellow.
Is that a shoe I hear dropping?
So all, except Jefferies have unlimited FED money to pay the lawsuits?
You mean "settle without admitting any wrongdoing", right?
Same thing.
Unfortunately
Seems like ZH is trying to cast JEF in the role of Lehmann 2011. 2011: the year that took out the last investment bank.
You can put a pig in a dress, but it's still a pig.
Yes, but look how nice it's legs look in those spike heels and notice how it makes the buttocks look rounder and higher.
Illusion is all we ever really have.
It said the seven banks helped draft the offering documents and sell the notes, collecting $21.2 million of fees, but that their "failure to conduct an adequate due diligence investigation was a substantial factor" in MF Global's collapse, as well as in defaults on the notes.
************
Isn't that what everyone wanted to do to rating agencies that stamped everything that came across their desk AAA until they read the fine print at the bottom?
I hope all 100,000 + customers that got screwed sue the shit out of these cocksuckersand actually win for once. Especially Corzzzit, I want to see that sucker get popped.
They should really sue the fed for discrimination... they've been bailing out every bank, buisness and country across the planet. When you have the power to create money and go out saving this firm and that by what grounds now do you get to pick and choose who lives and dies? Sue them bitches! Even if it's futile it makes a great headline.
Since coprorations are "people" couldn't we deduce in a court of law that people are corporations and therefore deserve a bailout too? The fed could also satisfy a portion of its dual mandate of inflation/employment and put the 100,00 or so on the books as employees.
Sadly, the US system is based on corporate law. This means that ANY entity that comes before the court (be the human or otherwise) is viewed as a corporation. This is also why your Social Security card is made out to a person with a name that is in ALL CAPS, denoting that it is for a corporation.
Chumba and others seem to be getting some traction in going to court as a sovereign, but I doubt that will last very long before it is slapped down.
The customers could have purchased Treasury notes at 3.25%, but instead purchased MF Global issues at 6.25% (plus a bizzare enhancer if Corzine left for Washington). Now the 6.25% notes have blown up and the 100,000+ customers are crying foul. The pension fund managers who bought this crap are telling the fund members, "We were lied to about the risk - nobody could have seen this coming".
This has gotten so old. Risk is risk. It does not take a financial genious to spot risk. The MF Global issue was hotter than a $2 pistol. They were a super deal, so it was obvious they were hot. Risky. Could burn you. Dangerous to buy or hold. Etc.
The "enhancer" is not so bizarre, actually. If you knew you'd get an additional 1% if Corzine became the Treas. Sec., you'd be one of 100,000 lobbyists out there trying to make it happen.
Time for the 6 remaining "banks" to pile on Euro debt on to Jefferies' balance sheets. Shurley there's some lopsided leverage scheme that can show net 0 exposure.
Sounds like relooting. Is relooting even a word? Well it is now.
(C) 2011 Spankfish
Just the facts man...just the facts...
re-re-re-re-......looting
How many re's can this ponzi go?
Arrest 3,000 for crapping I'm street.
Arrest 5 executives for stealing $600 million.
What would you do? I keep reading about banker fucks talking about wasting city resources on police overtime. As NWA said, Fuck tha police! Arrest the real criminals and the crowd just might dissipate.
Before they do any more arresting anyone they may want to make a call or two to their union reps and see how their pension funds are doing...just to be on the safe side....
imo it's a lot more than $600 million stolen. beyond the segregated accounts, most (all) of the securities underwritten for the firm appear fraudulent.
They arent just crapping on the streets.
You ought to ask Goldman's assistant vice president for operations if he detected any shit in his dinner last night.
Surely no one would be low enough to try to infect him with hepatitis, woyld they?
That would be terrible.
oh wow a faint spark of hope stirred just now
I recall going out to dinner and the steak I got was well done. I had ordered it medium rare. When the waiter asked how everything was, I said that the steak was overcooked. He took my plate away and said he would fix it. My date look horrified and I'm like "WHAT?" He said they don't care. " Do you really think they care?" He said the cook will probably spit in my food or drop it on the floor a few times before he cooks me another steak. Getting another steak took over a half hour.
So, here we have OWS...so many people who know that the cooks don't care. These "customers" are being characterized as some sort of sicko, wacko, disease-infested malcontents who don't know what they want. They are rapists, thieves and deficating fools who should just go home already.
The fraud, deception, thievery, fascism, money printing, criminality and control by the world's insiders is a tasty dish. Eat it. Better yet, just stay home and order in. Don't complain about the shit in the food.