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The Inside Story Of What Brought Down MF Global
Now that the affdavit of MF Global COO Bradley Abelow has been filed, we finally get the (partial and quite watered down) inside scoop of just what the events were that brought the company to its knees, and what specifically were the precipitating catalysts that ultimately led to the Halloween massacre. The relevant part begins with section E, paragraph 33, on page 13. "As a global financial services firm, MF Global is materially affected by conditions in the global financial markets and worldwide economic conditions. On September 1, 2011, MF Holdings announced that FINRA informed it that its regulated U.S. operating subsidiary, MFGI, was required to modify its capital treatment of certain repurchase transactions to maturity collateralized with European sovereign debt and thus increase its required net capital pursuant to SEC Rule 15c3-1. MFGI increased its required net capital to comply with FINRA’s requirement...." Read on.
Full affidavit (pdf)
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shame on every manager and exec who didn't go to regulators when commingling of client money began
"While the Company explored a number of strategic alternatives with respect to MFGI, no viable alternative was available in the limited time leading up to the regulators’ deadline. "
It should have read, "While the Company explored a number of strategic alternatives with respect to MFGI, including stealing client money, no viable..."
Corzine won't go to jail.
He's part of the club.
Fucking shame.
http://fucklloydblankfein.blogspot.com
i really curious about him joining mf global now. Hes a fuckin millionaire 50X over he didn't need this shitstorm. He is part of the club I don't buy he was trying to revitalize his career i think this was an intentional appointment i'll figure out why soon enough
good luck gumshoe.
So let me get this straight: Mark-to-market killed the MF Global? Guess the aliens didn't show up in time to allow them to perpetuate Mark-To-Fantasy....
END GLOBAL STARVATION. OPEN THE FOLLOWING IMAGE AND HIT CTRL-P AND GIVE TO THOSE IN NEED! TOGETHER WE CAN SAVE THE WORLD ONE MEAL AT A TIME!
THIS IS MARK TO FANTASY:
http://www.stag-berlin.com/images/katakt/Steak%20Dinner%20-%20Stag%20Ber...
Why the FU#K aren't you happy, you ungrateful little swine. We, your governmnent, fed you and clothed you, and yet you do not appreciate what you have been given. Time to MARK-TO-REALITY and then you will not have any pictures to eat!
You MFers don't seem to get it. MF = Refco. IPO to BK in 6 months. Took a while longer this time, but same type of crooks back at it again.
According to Wikipedia, after it went bust Refco was purchased by Man Financial -- the company that later spun off MF Global....
they probably had ex-GS alum use his political connections from NJ to throw state pension funds at MF Global.
Corzine made money despite his failure anyway so it was a win-win deal for him.If he loses, he takes $12M, if he wins he can grow MF Global to challenge Goldman Sachs and prove nemesis Hank Paulson wrong.
But in the end Goldman Sachs and Hank Paulson wins over Corzine.
Sorry but MF Global is not big enough not to fail.
OWS should celebrate this return of capitalism.
i see perp walks on this one. Corzine himself is a possibility. We need "late night hour with Aldus Huxley." It's time to start "plumbing the depths."
when you have that much $$ already, whatever you do is no longer about the $$ its about power. Corzine basically got kicked out of GS, lost out in politics, and decided to jump in bed with his friend JC flowers to try to build a new empire for himself. He was most certainly looking for some redemption.
who is this JC Flowers?
He's only the greatest banking super hero to ever live
you might find the answer you seek in this scathing blog posted at Turd Ferguson's sie:
http://www.tfmetalsreport.com/blog/2840/mfing-global
I think @ 23:17
Hows this for a theory-
Corzine joins MF a year ago, it goes from a stodgy broker to a 40-1 leverage gambler, what a coinkydink. I wonder who had the other side of his 6 Bil eurobond bets? Could it be Gold-inmy-sacks? As a smokescreen he did all th fancy footwork/logical hedging/short Frenchie bonds.
Why did AIG do 200 Bil of stupid insurance? Did someone infiltrate their City operation? Who had the other side of that stuff?
A gang chooses its mark, infiltrates, loots and vanishes. The club pulled off the biggest one in history...and its still operating!
In the end, Corzine says he didnt see it a comin. Holder agrees, so does sec, cftc, finra, snp. moodys, etc,
That's an interesting point 24k. GS etc could have benefitted mightily from a large buyer of euro debt when they needed to dump the stuff.
The scenario might go something like this:
1. Banksters club decides which company should be sacrificed
2. Sell all their euro crap to said willing buyer
3. Watch said company go bang,
4. Walk away
Like they sing while marching in boot camp: I dont know but I been told...
The plan is to have 3 megabanks left standing in the US. So.... JPM, GS and the third anointed one, C. C is a basket case. It only exists to aid the cia in the 200 countries its in.
Since BofA is from San Fran and now in NC; Wells Fargo is west coast...they will vanish by the hand of the NYC crew.
MS? Why dont they meld with JPM.
Theres the 3!
Is that the mighty Easter Bunny of Sanity Check fame?
It's funny that the shutdown of Deep Capture doesn't get much attention on Zero Hedge.
That is a pretty sensible theory. I am sure they had concurrent scams going knowing they would kill MF global in the process of looting it. They likely had a roadmap of the shitstorm they were planning and how to profit from it a multitude of ways both financially and politically.
Did a Bilderberger ever go to jail?
Conrad Black ... I would love to know the real reason ...
Alana Black is a goddess.
If only MILF Global had an FDIC-insured depository base, it could have used it as a first defense line against first losses, no commingling has been discovered, and ... talking about which I think I need to pay a visit to a certain bank to withdraw a remaining balance of few FBN-electronic equivalent monies.
The relevant part begins with section E, paragraph 33, on page 13.
No, not really. The relevant part is in the very last paragraph:
...the Debtors’ immediate objective is to maintain a business-as-usual atmosphere during the pendency of these chapter 11 cases, with as little interruption or disruption to the Debtors’ operations as possible.
Loot up boys! It's business as usual!
Seriously, what is the point of doing chapter 11 here? No one is going to have money at this brokerage BECAUSE THE COMPANY IS KNOWN TO STEAL IT. Not in the usual wall street way where they "invest" your money in shit the brokerage wants to unload, but by actually stuffing your money in burlap sacks and running off with it.
May as well send it to chapter 7 and start selling off the furniture. There is no recovering from this, even the brand name is worthless now, although they could staple it onto a TBTF bank for comedy sake:
Bank of MF Global Lynchings of America Countrywide
Give em a chance to get it right . Wire them all your accounts.
DIP financing.... bitchez?
i thought they were de-listed? now they're trying to claim "they're still trading." playing the demise of your career in the media now? "we're still working...we're just not doing anything right now"?
Page 19, Line (item) "50".
Actually it should read, "While the Company explored a number of strategic alternatives with respect to MFGI, all other parties were not stupid enough not to ask questions about a $1b short fall in clients' portfolios."
Glass-Stiegel anyone?
Not applicable. But thank you for playing our game.
Greed, I'm guessing.
I'm guessing the unicorn ran out of skittles....
the glass is half-broken
Nice, smashed Metaphor Slewie.
ORI
and the money's missing. "but we promise to put it back."
so it was a regulatory rule change that sucked MF dry
the same regulatory rule change that sucked $millions out of AIG and into Goldman Sucks pockets
now who has the Regulators and Exchanges in their pockets?
Answers on a Postcard to: Charity 4 Criminals Campaign, The Fleecing Dept, Blankfein & Dimon Inc Corp., Regulatory Capture Street, Washington Bum-Chum Club, Postcode: ASS-010-FUK
Loosing a hundred million a quarter (or more) probably didn't help much either.
but would MF have lost $100m a quarter if, as General Jim Sinclair suggests, their hedges (CDS's) had paid out?
there's another Regulatory 'capture' rule change.. the Bonds weren't deemed in default (when they clearly were)
Nobody's bonds be in default. Yet.
Maybe we can buy the Greek CDS out of bankruptcy for 1/1000th of face, then sue everyone and settle for 1/10th of face, or just wait them out and get 50% of face?
Lloyds of London looking wobbly. How's BofA doing?
Who knows. According to the affidavit they lost 200 million +/- when the regulatory change happened in September 2011, but they lost 94 million (and change) the same quarter the previous year. Doesn't it seem like these MFers have been bleeding for some time? My gut tells me that regulatory changes, bond defaults, etc. were only the final nail in a coffin MF had been working on for some time. It will be interesting when some of the people that really know this stuff dig around and find out what was going on, that's for sure.
I think the rule change performed bass to mouth as opposed to sucking them dry.
We had a bad quarter and it's all Europe's fault.
Excuses, excuses. How come Corozine didn't sign this? Is the COO the fall guy now?
Caustic was bizzy with his signing hand, new employment contract as Head of the US Treasury ...it's just one 'Winner' after another at Treasury
It was the weather, I mean volcano, I mean regulations, I mean . . . greed.
It's good to know we can start blaming the snow again.
Oh it wasn't snow. A radioactive butterfly flapped its wings near Fukushima and a counterparty in New York goes bankrupt. Now if a polar bear farts at the north pole, then Greece should default right?
The weather is the last resort of a scoundrel
- Nouriel Roubini
Transitory polar bears farts can't menace Greece or Mighty EFSF.
Mario Draghi will save Europe ... and assure that his boss at 200 West Street can loot the "remanents for 30c a buck" ... ( Me thinks he already saves Europe in turbo mode, buying italian crap ).
Nope, the dog ate the missing money.
I just want to know how JPM plans to classify the $1B+ owed to them as "revenue earned" for Q4 11
its all explained in 'Dimon's Creative Accounting', a textbook for bankster wannabes...
Goldman Alternate Accounting Practice.
They will buy the missing pieces from the BK court. Eg they buy the bonds, AND they buy the CDS. With all the assets back on their balance sheet, they'd make a killing!
It came down to would the regulators allow MF to lie (like Lehman)
Can you imagine the meeting where someone decided it would be a great idea to leverage up on the most toxic paper in the world. WTF were they thinking. I mean we just went through complete toxic debt hell in 08. You would think someone would have said, "hey we just saw what happened to when risky paper goes bad, maybe we shouldn't be buying this crap." Nope just buy it and hope for bailouts. Brilliant, just brilliant !!
That "someone" was Corzine himself. You see, he learned the lesson of moral hazard very well. The cronies get paid and the taxpayers get the shaft. So, that's the bet he made and levered it 40x (bet at the time he wished he could lever it the way the average Joe was allowed to leverage his one completely illiquid asset - his house - 100% leverage).
Who could expect a different result from something Government Sachs puked up to finish off the already ailing state of New Jersey?
I am half surprised Corzine wasn't bailed out. There must have been some serious gnashing of teeth when the NY Fed called and said they were cutting them off. Corzine probably crapped himself. Some have speculated that he ruined MF Global on purpose so his buddies at Vampire Squid could come in and buy up the tasty bits for pennies. What a complete waste.
Kat, i'm with you. this is exactly the fallout everyone should expect when moral hazard gambles go wrong. Corzine had, based (at least) on the last 3 years of Fed manipulation, every reason to expect a bailout. Bernanke has created so much moral hazard that, and i ask this (semi) seriously, would Corzine have violated his fiduciary reponsibilities by not maximizing return via the Bernanke put?
i almost have some sympathy for Fuld now. like, "WTF do you mean we're the only ones left to fend for ourselves??? We all deliberately created a gigantic, tangled web of CDS so that no single entity could fail!"
FWIW - today the financial entertainment channels were saying that volume on the floor of the energy exchanges were a fraction of what they were before the MF BK. Putting on a tin foil cap for a moment- this might have been a head shot to commodity speculators.
In this brave new world in which we find ourselves, there are no tin foil caps.
The bailout he expected, though, was not of his own firm. MF Global is big, but not big enough for another unpopular bailout.
The bailout bet he made was Italian bonds. It never even crossed his mind that European governments wouldn't find a way to fleece their own population to bail out other countries.
.
Welll! When you use the "segregated client accounts" what's the problem? "We do that all time. That's what the lawyers are for!"
If I remember properly, the EURium (sym Eur) is somewhere deep down the periodic table just between the unstability of Francium (not kidding) and the toxicity of Fermium.
So when you try to cool it down with some watered CDS we wish you better luck with your perception management compaign than TEPCO.
Stupidium is the most common element in the universe closely followed by assholinite that most prevalent of minerals originally discovered in NYC , specifically WS.
Douchebaginite is ubiquitously right in there too.
It's times like these that we need a steadying hand, where the hell is MillionDollarDork to show us the way through antithetical performance art.
bla bla bla you libertarians blah blah centrally planned good yadi yada Krugman and other PhD-holders know what is best for you ... correct market excesses.
MillionDollarBaby
Happy?
A corrupt , East Coast " Dock Boy"!
Brad-I want my money back.
I'm not a lawyer.
Corzine ran MF with all the skill, prescience and finesse that he used to run New Jersey.
Fuck that means he is totally incompetent!
Because what happens in Jersey, stays buried in Jersey
dont you people see what really happened....MF was told that the fed/treasury would buy all the sh%t euro debt so they went big and bought it but they were a week too early. now goldman sucks will buy their 'exposure' for ten cents and then the fed/treasury will buy it from them for $10,000,000,000,000,000,000,000,000,000.........none of this is 'accidental' or happenstance.
Will that be by check, money order, imaginary 1s and 0s, or "pennies from heaven?"
Corzine is just the fall guy. He will be graciously rewarded by the Rothschild, Blankfein et al
One blunderfuck after another
Shortly after dark, the lookout on the wing of the bridge reported, "Light, bearing on the starboard bow."
"Is it steady or moving astern?" the captain called out.
Lookout replied, "Steady, captain," which meant we were on a dangerous collision course with that ship.
The captain then called to the signal man, "Signal that ship: We are on a collision course, advise you change course 20 degrees."
Back came a signal, "Advisable for you to change course 20 degrees."
The captain said, "Send, I'm a captain, change course 20 degrees."
"I'm a seaman second class," came the reply. "You had better change course 20 degrees."
By that time, the captain was furious. He spat out, "Send, I'm a battleship. Change course 20 degrees."
Back came the flashing light, "I'm a lighthouse."
-------
*Naval Institue magazine
"that ain't no iceberg" is it! "that's called land...and you're out of excuses."
Great Work! Tyler and ZH are the best at getting the facts! Unfortunatley, your readers are the worst traders. That's OK because you guys are awesome. Please continue to provide the very best despite some/most of your readers. Me and a lot on "The Street" love your work!!!!! (of course....in secret;) )
I just ate 20 McNuggets and 4 cheeseburgers, and now my ears are ringing. Can you hear that?
Very strange this company was a primary dealer considering it was so much smaller than firms like GS, Citi, Barclays, UBS, etc.
the william dudley approves PDs based on a size of beard to receding hairline raito
They had no choice. They are not at fault. Volitile Markets was the theif and He needs to go to jail.
I still find the name "MF'ers" ironic as "madeoff"
So let me get this straight, they have a grand total of 13 employees in the US, and they were given Primary Dealer status.
How exactly does that work?
Info on page 4 section 9
Yeah... I saw that too...
Should we be surprised though, I mean, all things considered?
Again I ask: Would You and ZH ever consider doing what you love to do....free opinion....except for a private hedge fund? Do whatever you want...no boss..just continue to do your thing...just under a hedgefund umbrella? Don't answer...just keep it in the back of your mind. You can keep the distrust and the hate...I would encourage it. Just be paid a sick amount for being you?
Quit asking and just send the Tylers an email.
Thanks for gracing us with your presence though.
Cheers
TINSATAFL!
From p. 14 of the Abelow Declaration: Concerns over euro-zone sovereign debt have caused global market fluctuations in the past months and, in particular, in the past week. These concerns ultimately led last week to downgrades by various ratings agencies of MF Global’s ratings to “junk” status. This sparked an increase in margin calls against MFGI, threatening overall liquidity.
Oh I see, it was Euro-zone sovereign solvency concerns that were responsible for MF Global ratings being downgraded to junk. MF was just an innocent bystander. Is there no one at MF with the balls to take responsibility for the shitty prop trades that killed the company? Corzine? Anyone? <<crickets>>
The issue which has swept down the centuries and which will have to be fought sooner or later is The People vs. The Banks.”
- Lord Acton, Historian, 1834
Once you figure out the old playbook, the culprits will end up in jail or their families will suffer. Stop being a worry wart.
We need to have Jon and more of his kind in correctional facilities... then maybe the markets will be allowed to correct themselves.
Every CFA, and FRM Member associated with MF Global should be suspended from using the designation.
so should the lawyers. of course "start talking first" cuz these are felonies.
Glass is half-broken. Great point.
Someone would say the glassmaker will profit.
The person drinking will get shards until then.
Hmm - Just who was it that rated the Bonds as "Investment Grade" in August? Hard to believe how something can go from "Investment Grade" to dog shit in less than 1 quarter. If they can't hang Corzine for theft I would love to see the basis for the Bond rating (maybe a little manufactured "spin")??.
The sheer scale and boldness of the thievery really pisses me off. Hang the banksters.
oh, yeah. "Jeffries." Forgot about them. They keep claiming "everything's fine!" Or was that "we were a victim of fraud!" Not 'till the company collapses i imagine.
http://www.google.com/trends?q=mf+global&ctab=0&geo=all&date=mtd&sort=0
Somewhat unrelaed, but I find it interesting that Singapore and Hong Kong were searching for MF Global way more than USAsians, except New Yorkivites.
The concept of money depends on confidence. Who are these idiots in the Financial industry?
I don't have any confience in what is happening. Doean't anyone keep a set of honest books?
Santa Claus - the naughty/nice list - does that count?
Obama and his cronies just continue their absolute disregard for the law!!
Everything from failed solar companies, to giving guns to Mexican drug cartels, and finally the most disgusting criminal action we have seen in a long time.
The NATO slaughter of free Libyans is 100% a war crime!
Washington Wants Its Imperial Model Followed In Libya!
http://theintelhub.com/2011/11/01/washington-wants-its-imperial-model-re...
WTF?
* CNBC may be out of pocket as it turns out that one major MF Global creditor is none other than CNBC itself - The Independent
No link came from wires.
you want the media to confirm this? anywho if this is true then you'd get REAL perp walk! "Media crimes" baby!
Here's a good story on that - http://www.zerohedge.com/news/full-mf-global-bankruptcy-petition-which-we-find-corzines-bankrupt-firm-owes-cnbc-845397
This guy Bradley Abelow was Corzine's pick to be Treasurer then Chief of Staff ,he totally ruined N.J budgets and was a arrogrant prick ,who's answer was always to raise taxes on the masses ......."were a wealthy state they can afford it" ..."Qu'ils mangent de la brioche "
who?
I can't help but feel this could be a trial run on nationalizing retirement money. We'll have to wait and see how much client money if any they allegedly used from pensions or the likes. With a few well placed failures in a couple of firms that may or may not be insured, you would have people screaming bloody murder, begging to have their accounts restored to their former 200.5K glory. In whatever form the gov was willing throw at them.
Easy way of manufacturing a little panic and locking cheap money into zero interest 30+ year T's.
Someones gotta buy em...
Rest easy bitches. Eric 'The Wolf' Holder is on the motherfucker.
Eric "Empty Suit" Holder will be on it as soon as he shows up for his 1st day at work...
Eric, the address of your office is:
Citizens: Call 202-514-2000 and tell the DOJ where to send the limo if you have seen Eric...
Citizens: Call 202-353-1555 if you have a suggestion for Eric when he shows up for work...
Let's relax here, Holder has a competent staff that is able to read and file statements from insiders with attached campaign contribution checks and recommend no charges! I am sure JC as an ex Govenor, ex Senator and GS alum will be able to offer up, I mean, provide information regarding a back office dark skinned foreigner fall guy from accounting. Too many bodies buried and skeletons in the closet to even look at the big guy, besides he wouldn't lie.
Obama stumping for Jon Corzine 2:28
http://www.youtube.com/watch?v=V8WkCDe0L9o&feature=related
Corzine...
Why does he look like The Bernank's brother?
...Anyone?
This is the kind of sick twisted shit that happens when republicans run government and democrats run brokerages.
"Some one send them the new scripts, call casting, this is all fucked up...cut!!!"
"increase its required net capital"
SEC mandated margin call!
While the talking heads deride the alphabet soup of agencies over the lack of oversight, it is oversight itself which initiated this debacle.
Thus, the very agency which is so often seen as perpetually asleep at the wheel is seen here to pounce on a single firm with a very politically prominent figurehead!
Why was the carpet pulled out and a head upon a platter requested? Was the use of client funds a retaliation for the sabotage?
As a primary dealer in EU bonds, is there no mention of MF's absence in the delay in EFSF bonds?
Jon may see some jail time on this as he's not a full fledged member of the Tribe. Mother was Jewish, but Dad wasn't and that makes Jon a Mischling and may also make him a fall guy in the end.