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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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I didn't notice wether the exchange was included or not but they damn well should be!!!
Luv, luv, luv the video ;)))
Biden and Obumma "trusted the judgement" of Jon Corzine. They called him for his advise as he knew better than anyone on economic matters because he'd "been in the economic furnace" (ie. an ex Goldman Sucks chief executive)
..and Biden and Bumma used Corzines 'expertise' with his New Jersey economic stimulus plan to design their US Govt economic regeneration (spending orgy)... Corzine surely knows how to have a major economic impact. He robs others (learned in Govt yes?)
No wonder Bumma shot off to Australia to get as far away from the stink as possible and Biden (and Geithner and Bernanke) is nowhere to be seen
Fuking Priceless
Thanks for posting the link to the MFG prospectus - what stuck out is the EXPERT section with the phrase
"in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting ..."
More roaches, no doubt.
A pithy rewrite of the prospectus might be: All your money are belong to us now you are FUBAR forever. Please sign here and nod your head. "Ben, ah, Mr. Dover - another client for you to wittness."
M F ... Indeed!
the major global accountancy firms like PWC are even more corrupt than the Credit Ratings Agencies
Plenty of powerful forces in the universe. Magnetic Storms, Gamma Rays, Neutrons flying faster than light (maybe), Sunspots and Magnetism. And the human ego, ignoring all that doesn't place humans at the center of the universe. Open your eyes, get away from the TV, get away from over reading blogs! Go hiking, clear your head. Take a moment to "Watch the thinker", there is a natural mechanism that occurs that causes us to "think continuously" because we believe that thinking is work and working is good, and in fact this overthinking obscures the reality in front of us. Give some non-thought to that, seriously.
http://oahutrading.blogspot.com/2011/11/flat-into-weekend.html
With all the MF Global "whateverthefuck" I think it would be VERY INTERESTING for Gerald Celente to go file an official criminal complaint with the FBI.
Mr. Celente. Just walk into an FBI building with some documents and "report a crime."
Name Jon Corzine, CME Group and JPM are prime suspects.
Do your honest best to document the process. Do they even do anything? Boots on the ground.
How are you treated, etc? Report back to the World on how serious this is being taken by the Feds. Their apathy speaks volumes amid the rape of Amerika.
While everyone sees the wholesale pillage of confidence in the financial system, what springs the police into action in these End Days?
If you want people to read your rants then at least have boobs for your avitar. I am on strike-- no boobs- no read.
I read it twice.
C,mon guys. The plaintiffs are just poor losers. They willing poured other peoples' money(the pensioners') into Jon Corzine's private casino and crapped out. Now they want the money back from the indemnified underwriters that were selling deck chairs on the Titanic? Good luck with that. They were idiots for investing in the bonds and now they are just cry babies looking for a deep pocket. They were conned fair and square by the industry. What would happen if Wall Street had to pay back every losing investment that they ever underwrote? What kind of crazy world would that be?
dear mr.ms. person below zero. no. these are bonds. they were rated. the value has gone to zero. in months.
The prospectus reads the bonds were high risk. Corzine basically told everyone that he was turning MF into a casino. What's not to understand? The investors were idiots for buying the bonds and got what they deserved for gross stupidity. The pension fund managers that bought these bonds should be fired immediately and incarcerated for blowing Mom and Pop's money on trash investments.
Let me speculate ZH is in the pockets of the short sellers...
Jefferies underwrote $284M of the debt (and wasn't even on the prospectuses of the remaining debt), of which will have some recoverability (Fitch says up to 30%). A full judgment is $200M, a tenth of market value. No way in hell they get a full judgment against them. (Should underwriters be required to do a whole new complete deep audit for bulk of their diligence? Another discussion for another place, but if so deals would be so expensive to do they'd never happen...) Had nothing to do with the remaining ~$600m unsecured floated this year.
And likely already leaked given the recent price action...
LOL. Joe Biden makes Sarah Palin look like a genius.
Gerald Celente who got caught up in MF Global ripping Jon Corzine a new asshole. Priceless.
http://www.financialsense.com/financial-sense-newshour/big-picture/2011/...
Confidence level for paper fiat instruments from to big too fail are beyond trying to polish a turd. The western bankstering system needs flushed and the cesspool drained. Getting to where citizens running in circles but no criminals have their foot nailed to the floor. Nail these criminals and lets auction off a few heads to pay down the 15 trillion US debt. benron burnokio dead head fed chair would be a good start. I'll start the bidding at 1 billion USDinker dollars for each raping central bank of nations enslaved in financial paper ponzi fiat hell. By the time these criminals are brought to justice we'll be dead along with every fiat currency the rat bastard central banksters created. Not only do you have to keep your assets out of the reach of the vampire squids to keep from losing them but soon the 4th riech will be kicking down citizens dooors to confiscate them. Coming to a theater near you. World order goose stepping for power and wealth.
I believe Pat Fitzgerald just initiated subpeonas to MF Global. Bad News for MF Global.
U.S. Attorney Patrick Fitzgerald in Chicago issued subpoenas in a probe of MF Global Holdings Ltd., the broker-dealer parent that filed for bankruptcy Oct. 31, a person familiar with the matter said.
holder's heroes
instructions to chicago: follow standard procedures
I failed to mention! Running any lawsuits through the skunk works factory, the western bankstering criminals own, we the people get jiffy lubed. Pensions will not recover citizens funds; neither come out better off in the circle jerking ponzi go round of ameriCON'd injustice system. I say just march the plaintiffs off to FEMA camps for re-education before they're milked of further funds. Throwing good money after bad to the vampire squids. Someone already said it best here by the goons staying solvent longer than plaintiffs (SUCKERS). LAW MAKERS ARE HAVE BECOME A LAW UNTO THEMSELVES. UNTOUCHABLE. I often stated, we're entering an epic era where 100% possession will be the law, among the lawless BANKSTERS. If it isn't in your hands, you don't own it with the freak show western bankstering megalomaniacs going wild along with gov goons.
Never untouchable good sir. Never.
Get you some brass n' lead people. Soon you will have nothing to lose.
http://www.youtube.com/watch?v=i5dBZDSSky0
George Carlin - It's a big club and you ain't in it
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http://www.youtube.com/watch?v=jrLbY4-Q99A&feature=related
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South Park- Bailout
http://www.youtube.com/watch?v=IPEYycCRKXo&feature=related
.
Bitcoin......"And it's gone!"
http://www.youtube.com/watch?v=fErOzTcWixw&feature=related
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South Park vs. Cafe Del Mar - And It's Gone (Johannes Dahlberg Financial Crisis Mash)
http://www.youtube.com/watch?v=4TlPo0yCSa4&feature=results_main&playnext...
Wasn't aware Corzine had such good ties to the Obama administration.
Was just thinking of the great bet all the star bond traders took earlier this year, when moving to Jefferies. If they did not get an upfront payment large enough, they sure suffer now.
This is the sign for all the corrupt little carrot head puppets in D.C. to head too their bunkers.
Nancy, I hope you're scared shitless.
Reuters - A raft of bidders including J.P. Morgan is lining up for failed brokerage MF Global's stake in the London Metals Exchange, two sources familiar with the situation said, providing some solace for creditors.
Shocked by this. Not.
Senator Bachus and crew needed a new stock to short. They do have great insider information. It might have also been a dry run to see what would happen to their money if Europe tanks, because they gave them 600 billion dollars.
Anyways, they decided since the banks are in their bank pocket anyways, MF Global would be a good target because they will keep their mouths shut. The only way the theory will be proven is if Corzine goes to prison or not.
RICO. All that the sheeple can do, is demand that their AG's use RICO to prosecute these criminals with racketeering. If people demand prosecutions, really demand them, they will empower some of the more honest AG's and judges to do the right thing. While most elected officials are corrupted,not all are. The ones that are not, need our support and the ones that are, need our ire. They need to be exposed, named and shamed. We have allowed ourselves to get here because we have been complacent. It is time to act.
The Racketeer Influenced and Corrupt Organizations Act, commonly referred to as the RICO Act or simply RICO, is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization. The RICO Act focuses specifically on racketeering, and it allows for the leaders of a syndicate to be tried for the crimes which they ordered others to do or assisted them, closing a perceived loophole that allowed someone who told a man to, for example, murder, to be exempt from the trial because they did not actually do it.