MF Global Trustee May Pursue Claims Against Jon Corzine, Could Sue JP Morgan

Tyler Durden's picture

In all the recent talk of economic gloom and doom, not to mention JP Morgan rehearsing for its role as Federal Reserve and failing miserably, some forgot that Jon Corzine still walks free. That may change soon if James Giddens, trustee for the liquidation of MF Global has his way. In a report filed today, Gidden says: "As attempts were made to transform MF Global into a full-service global investment bank, management failed to add to its Treasury Department and technology infrastructure, which was needed to meet the demands on global money management and liquidity." He continues: "My investigation has concluded that management’s actions, along with the lack of sufficient monitoring and systems, resulted in customer property being used during the liquidity crisis to fund the extraordinary liquidity drains elsewhere in the business, including margin calls on European sovereign debt positions." So someone was at fault: who? "I have determined there may be valid claims against individuals and entities. In my capacity as Trustee, I will make every effort to ensure that such claims result in the greatest possible returns to customers in an efficient and fair manner, whether those claims are pursued by my office or others." And specifically from his list of recommendations: "Provide for civil liability for officers and directors in the event of a commodities segregation shortfall." Well, we know there is a shortfall. So... why is Jon Corzine still walking free? Oh wait, Valukas said there were "colorable claims" against Lehman management too. Last we checked Dick Fuld is still out there... somewhere. But generally yes: it just has not been JPMorgan's year so far.

More from the report summary:

CAUSES OF ACTION

The Trustee has concluded that valid claims may be asserted against certain individuals and entities. He will use his efforts to pursue these claims, either through litigation or negotiation, or to support the pursuit of these claims by others to recover customer property in accordance with his goal to return as much customer property as possible. The Trustee expects, in light of progress in negotiations, further consultation with customer representatives, and legal analysis, to reach decisions about commencing most major litigation to recover customer property within 60 days.

The Trustee is working diligently and expeditiously in the pursuit of potential claims:

  • DIRECTORS & OFFICERS: The Trustee believes that claims, including claims for breach of fiduciary duty and negligence, may be asserted  against former MF Global CEO Jon Corzine, former MF Global CFO Henri Steenkamp, and former MF Global Assistant Treasurer Edith O’Brien, among others. The Trustee is already consulting with commodities’ customers’ class action counsel about actions against officers and directors and other employees, and the Trustee has also communicated with relevant insurers.
  • JPMORGAN CHASE: The Trustee is engaged in discussions with JPMorgan Chase (JPM) with respect to transfers that the Trustee believes may be voidable or otherwise recoverable. JPM has cooperated with the Trustee’s investigation, and the Trustee has announced publicly that he is engaged in active discussions with JPM with respect to these matters. In the event these discussions do not result in an agreement, the Trustee, if appropriate, will commence litigation. To date, JPM has returned approximately $89.2 million in customer property and $518.4 million in non-segregated unallocated MF Global Inc. assets, subject to certain reservations of JPM’s security interest in such funds. This sum includes $168.1 million in funds representing the proceeds of excess collateral that JPM held at the commencement of MF Global Inc.’s liquidation, which will be subject to an appropriate allocation.

RECOMMENDATIONS

The report also includes a discussion of the Trustee’s recommendations for legislative, regulatory or other reforms that might help avert similar liquidations in the future, or at least alleviate their consequences:

  • Abolish the alternative calculation method and implement a requirement to segregate an amount in excess of 100% of customer funds.
  • Eliminate the segregated versus secured distinction in Commodity Futures Trading Commission (CFTC) Regulation 30.7, ensure consistency of customer protection when trading overseas, and monitor compliance abroad closely.
  • Create a protection fund for futures and commodities customers under a certain threshold, and implement suitability standards for customers of Futures Commission Merchants (FCMs).
  • Provide for civil liability for officers and directors in the event of a commodities segregation shortfall.
  • Consider simplifying some CFTC rules for bulk transfers and claims in an FCM liquidation proceeding.
  • Enact legislation explicitly authorizing Trustee standing on behalf of customers.

Below is the full 275 findings report (link)

 

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GetZeeGold's picture

 

 

Oh here.....I think this fell out of your pocket.

 

Pladizow's picture

NOTHING will come from this!

Ahmeexnal's picture

Honorable people have immunity from criminal prosecution.
Sadly, Dimon ain't "Honorable", thus he is about to be made an example to calm the sheeple:

http://www.silverdoctors.com/jpmorgan-implicated-in-japans-insider-tradi...

Pladizow's picture

Bet? - Say 1oz of your choice!

Bollixed's picture

Some pakalolo from the Choomwagen stash, perhaps?

Colombian Gringo's picture

That filthy sack of shit called Corzine deserves to have his balls electrified and then fed to his dog.

sunaJ's picture

It is such bullshit.  A trustee can sue, yes, and I hope he does.  But, when a rape or any other crime has occurred, you don't start with a civil action.  You go after the criminals' balls.  THEN come the civil suits.  The Justice Department is silent.  Rape, loot, repeat.

 

American Justice has become a farce.

Pladizow's picture

Remember, its the criminal justice system, i.e., justice for the criminals!

Winston Churchill's picture

They will just dag it out past the Statute of Limitations

backstop.

SOP

Thats what they have done with the RMBS multiple frauds

that a twelve year old could have sucessfully got a

conviction  on.

Things that go bump's picture

Then maybe it will be a little rough frontier justice for those boys.  

Zero Govt's picture

Giddens language is bland and gives only a nod to the 'hot politics' of the situation (theft of cleint funds) by senior managers whose bet needed covering. No mention by Giddens of anyone who accepted these stolen/segregated funds and no mention if they've still got their hands on it

they're going to throw a book keeper under the bus, that'll be about it (NY gangster bankers style)

who were the shareholders at MFG that wanted 'extra' pay for Corzine coming aboard? ...they appear as impressed with Corzine as the Presidential Teamsters

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

NotApplicable's picture

Of the criminals, and by the criminals.

Matt's picture

Correct me if I'm wrong but:

1) The FBI is the group that handles investigations for the Department of Justice on financial crimes

2) after 9/11, the Bush Administration relocated nearly all agents from Financial Crimes to Counter-Terrorism, leaving only 2 agents per State

3) The Enron Investigation took 45 agents 5 years 

4) If the man-power effect is linear, this means a crime of similar complexity would take 2 agents about 100 years to conclude

ATM's picture

The FBI has simply dropped investigating cases where losses are small. In 2001 they were investigating over 1800 cases with loses of 25k or less. Now they have one. Those types of cases have been shifted to other agencies such as the SEC and ....ahem. the Justice department.

They still devote as many people to large case fraud as they did pre-9/11. There are 1300 agents "investigating" 11,000 financial crime cases.

StychoKiller's picture

I understand that Agents Mulder and Scully are done with the X-Files...

NotApplicable's picture

I just love this part.

"As attempts were made to transform MF Global into a full-service global investment bank, management failed to add to its Treasury Department and technology infrastructure, which was needed to meet the demands on global money management and liquidity."

If only they'd been smart enough to run a "full-service global investment bank," why... then they'd never had to resort to outright theft. But you know how them "good ole boys" are, always gettin' in over their heads, and windin' up in trouble.

*Cue the Dukes of Hazzard clip of the General Lee flying across the screen*

tmosley's picture

"That's as good as money, sir.  Those, are IOUs."

sunaJ's picture

$275,000.  I'd hang on to that one.

rehypothecator's picture

The article is deceptive if you get the idea this action "just" occurred.  The shortfall was 1.6 billion (4d +30.7 combined) before the article was published, and remains 1.6 billion today.  The story is a pro-JPM shill article.  Otherwise the shortfall would now be 1.6-.6=1.0 billion. 

prodigious_idea's picture

Can someone please help me spell appeasement.

LeonardoFibonacci's picture

Time for Jon Corziné to pull a Kenneth Lay (fake death) & move to the Caymens next to the real Madoff and Kenneth Lay.  The guy in prison is not Madoff but a patsy who accepted money for his family and sacrificed himself for the sake of his family.

CIABS's picture

I'd like to see your substantiation.  Ken Lay gave me the impression of someone they would silence rather than preserve and protect.  Of course, the official story was phoney.  Madoff?  Lots of questions there.  Was it just a ponzi, or was a significant amount of capital diverted somewhere?  And I don't mean into Madoff's pocket.

eatthebanksters's picture

When mom catches you with your hand in the cookie jar the first time, she smailes and tells, you no.  When she catches you a second time, especially after you PROMISED to behave, she kicks your ass...

jayman21's picture

One typically sees these types of events at bottoms.  The question is the bottom of what?

The trend is your friend's picture

No one is going to jail

The only way this shit stops is if a client/Farmer or anyone who's money was stolen takes a sniper rifle and hits a few of these pricks in the nuts so they can't walk around with their ego's and swingin D#$% thinking nothing can touch them

Hippocratic Oaf's picture

I don't think their dicks "swing". Which may be the reason why they are what they are.

Just an opinion.

XitSam's picture

Not personal enough. Up close, and with a knife.

Vince Clortho's picture

It's 11:05 on Monday.

Do you know where Jon Corzine is?

Toolshed's picture

I doubt very seriously if Jon boy is even the least bit worried about being prosecuted in the US. He is probably much more concened about current events.........like how he can spin this mess into being selected by Romney as his VP running mate. I mean c'mon, when private employment fails, it's back to the public teat of course.

NotApplicable's picture

Nah, he's damaged goods here. I look for him to get a UN or some other geo-political post, like say, Director of the World Bank.

prodigious_idea's picture

Thumbs Up if you think there will EVER be a conviction.

Thumbs Down if you think not.

Jena's picture

If he really does get in trouble there could even be a Presidential pardon in his future.  We don't know who is on Obama's list for that.

But I'd like to think that one day (when Corzine least expects it) one of the ranchers with all the years of experience with long-range firearms will get a clear view.

DoChenRollingBearing's picture

+ mucho

 

Corzine may get the pardon.  A quick prosecution would be nice ("ha ha ha ha!!!).

I also hopes the rancher uses just one round.  We don't want to have a society wasting lead...

Lord Blankcheck's picture

It's in the NY court system with a Judge(Judge Glen) that never rules against the NY mob,I mean Banks.

eatthebanksters's picture

Corzine has already been convicted, jist not in a court of law...I'm waiting for the sentence to be carried out.

Conman's picture

If i had to see either Corslime or Dimon get fucked by this, i'd pick Dimon that smug looking twit.

DoChenRollingBearing's picture

About time Biggest POS on Planet Earth (tm) Jon Corzine gets what is due.  COMPLETELY agree with "Conman" re Jamie Dimon as well.  

Are all/most of these slimy bankers Obama bundlers (I do not know, a real question)?

Zé Cacetudo's picture

Corzine is indeed an Obama bundler. According to opensecrets.org, he's "contributed" $897,232 to Obama. This puts him at #13 on the list.

See for yourselves: http://bit.ly/L7fvMQ

I didn't find Dimon on the list, but there are lots of other familiar names.

ATM's picture

Dimon is not an Obama buddy so his chances of getting convicted are 1000% times greater than Corzines. Dimon could be made example of to appease the masses of ignorant fucks and Corzine has to walk because he's tight with power master.

(they're ignorant fucks not because they want Dimon's head but because once they get it they will move on to something else and not demand Corzines head on a stick too)

midgetrannyporn's picture

Corzine and Dimon should be burned at the stake together with a flaming pile of ben shalom's clownbux at their feet.

MsCreant's picture

I don't know...a nice hack that leaves all their digital holdings reading $0.00 would be good, first. Then prison time with Hubba and Bubba (oh yeah, their mother had all her money "vaporized"). Then we do what you say...;-)

ISEEIT's picture

Corzine is a playa.

Simple as that.

fuu's picture

Edith O'Brien is so farked.

Jim B's picture

Enforcing current laws would be a good start! = Jail for Jon! LOL

 

Zero Govt's picture

NYPD moved Hell & Earth to bang-up Strauss Khan at light speed on an accusation he forced a chambermaid to give him head

NYPD, SEC, Democrat Party and Major of NY all quiet as church mice on the Corzine affair

stinks doesn't it?