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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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Mon, 06/04/2012 - 11:04 | 2491959 Dr. Engali
Mon, 06/04/2012 - 11:06 | 2491979 GetZeeGold
GetZeeGold's picture

 

 

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

 

Mon, 06/04/2012 - 11:10 | 2491992 Pladizow
Pladizow's picture

NOTHING will come from this!

Mon, 06/04/2012 - 11:26 | 2492074 Ahmeexnal
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...

Mon, 06/04/2012 - 11:30 | 2492101 Pladizow
Pladizow's picture

Bet? - Say 1oz of your choice!

Mon, 06/04/2012 - 11:45 | 2492148 Bollixed
Bollixed's picture

Some pakalolo from the Choomwagen stash, perhaps?

Mon, 06/04/2012 - 13:00 | 2492429 Colombian Gringo
Colombian Gringo's picture

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

Mon, 06/04/2012 - 13:10 | 2492451 Carl Spackler
Carl Spackler's picture

My choice is gold.

Mon, 06/04/2012 - 11:27 | 2492077 sunaJ
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.

Mon, 06/04/2012 - 11:32 | 2492108 Pladizow
Pladizow's picture

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

Mon, 06/04/2012 - 11:56 | 2492195 Winston Churchill
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.

Mon, 06/04/2012 - 12:07 | 2492230 Things that go bump
Things that go bump's picture

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

Mon, 06/04/2012 - 12:11 | 2492241 Zero Govt
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

Mon, 06/04/2012 - 11:58 | 2492199 NotApplicable
NotApplicable's picture

Of the criminals, and by the criminals.

Mon, 06/04/2012 - 12:42 | 2492356 Matt
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

Mon, 06/04/2012 - 15:16 | 2493006 ATM
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.

Mon, 06/04/2012 - 20:14 | 2494123 StychoKiller
StychoKiller's picture

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

Mon, 06/04/2012 - 11:30 | 2492095 NotApplicable
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*

Mon, 06/04/2012 - 11:15 | 2492015 tmosley
tmosley's picture

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

Mon, 06/04/2012 - 11:28 | 2492083 sunaJ
sunaJ's picture

$275,000.  I'd hang on to that one.

Mon, 06/04/2012 - 11:17 | 2492030 rehypothecator
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. 

Mon, 06/04/2012 - 11:24 | 2492061 prodigious_idea
prodigious_idea's picture

Can someone please help me spell appeasement.

Mon, 06/04/2012 - 11:42 | 2492142 LeonardoFibonacci
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.

Mon, 06/04/2012 - 16:29 | 2493376 CIABS
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.

Mon, 06/04/2012 - 12:19 | 2492265 eatthebanksters
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...

Mon, 06/04/2012 - 11:05 | 2491967 jayman21
jayman21's picture

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

Mon, 06/04/2012 - 11:06 | 2491975 The trend is yo...
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

Mon, 06/04/2012 - 11:30 | 2492096 Jayda1850
Jayda1850's picture

God I can only hope.

Mon, 06/04/2012 - 11:59 | 2492204 Hippocratic Oaf
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.

Mon, 06/04/2012 - 12:18 | 2492263 XitSam
XitSam's picture

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

Mon, 06/04/2012 - 11:06 | 2491978 Vince Clortho
Vince Clortho's picture

It's 11:05 on Monday.

Do you know where Jon Corzine is?

Mon, 06/04/2012 - 11:07 | 2491981 GetZeeGold
GetZeeGold's picture

 

Yes.....in France.

 

Mon, 06/04/2012 - 11:21 | 2492047 Toolshed
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.

Mon, 06/04/2012 - 11:39 | 2492125 NotApplicable
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.

Mon, 06/04/2012 - 11:07 | 2491982 prodigious_idea
prodigious_idea's picture

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

Thumbs Down if you think not.

Mon, 06/04/2012 - 11:29 | 2492090 Jena
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.

Mon, 06/04/2012 - 11:41 | 2492134 DoChenRollingBearing
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...

Mon, 06/04/2012 - 11:50 | 2492171 Lord Blankcheck
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.

Mon, 06/04/2012 - 12:21 | 2492275 eatthebanksters
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.

Mon, 06/04/2012 - 11:09 | 2491989 Conman
Conman's picture

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

Mon, 06/04/2012 - 11:43 | 2492028 DoChenRollingBearing
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)?

Mon, 06/04/2012 - 12:39 | 2492349 Zé Cacetudo
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.

Mon, 06/04/2012 - 15:21 | 2493025 ATM
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)

Mon, 06/04/2012 - 11:22 | 2492052 midgetrannyporn
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.

Mon, 06/04/2012 - 11:42 | 2492141 MsCreant
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...;-)

Mon, 06/04/2012 - 11:22 | 2492054 ISEEIT
ISEEIT's picture

Corzine is a playa.

Simple as that.

Mon, 06/04/2012 - 11:25 | 2492066 fuu
fuu's picture

Edith O'Brien is so farked.

Mon, 06/04/2012 - 11:36 | 2492119 HellFish
HellFish's picture

Seriously.

Mon, 06/04/2012 - 11:26 | 2492073 Jim B
Jim B's picture

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

 

Mon, 06/04/2012 - 12:21 | 2492273 Zero Govt
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?

 

Mon, 06/04/2012 - 11:27 | 2492078 insanelysane
insanelysane's picture

The report seems to be missing comments from Corzine's kids.  How could that be?

Mon, 06/04/2012 - 11:28 | 2492085 Temporalist
Temporalist's picture

Damn you ZH I just shared this on the Obama thread.  Foiled again!

Mon, 06/04/2012 - 11:31 | 2492103 Miss Expectations
Miss Expectations's picture

THEY'RE ACTUALLY BLAMING THIS CLUSTERFUCK ON A FAILURE TO EXPAND MF's IT DEPARTMENT???

6 months and that's the best they can do?

This is Rambo with a flyswatter.  Negotiate from a position of strength...with the MF Global executives inside of a jail cell.

"The Trustee is engaged in discussions with JPMorgan Chase"  Mother of God...

Mon, 06/04/2012 - 12:21 | 2492274 Nobody For President
Nobody For President's picture

+1 for "Rambo with a fly swatter."

Mon, 06/04/2012 - 11:55 | 2492189 GrinandBearit
GrinandBearit's picture

Guillotine ALL these fuckers!

Mon, 06/04/2012 - 12:08 | 2492234 djsmps
djsmps's picture

So... why is Jon Corzine still walking free?

http://www.youtube.com/watch?v=MA-eWdHdiRA

Mon, 06/04/2012 - 12:10 | 2492240 Bartanist
Bartanist's picture

C'mon, JPM can handle it. Jamie says they have a "fortress balance sheet". Time to see what a "fortress balance sheet" is good for... hopefully it is good for more than just paying lawyers.

Mon, 06/04/2012 - 12:19 | 2492268 tony bonn
tony bonn's picture

steenkamp and o'brien are smarmy lying whores....they should have been locked up for perjury when they appeared before congress a couple of months ago...

laying the blame for the fiasco at inadequate technology and process controls is another sack of shit lie....this theft was control fraud through and through.....gidden is an accomplice....

jpm needed the money for its fraudulent whale trades - probably margin calls and chump change at that....

crime pays

Mon, 06/04/2012 - 12:23 | 2492286 Nobody For President
Nobody For President's picture

I read this:

former MF Global CEO Jon Corzine, former MF Global CFO Henri Steenkamp, and former MF Global Assistant Treasurer Edith O’Brien, among others

 

and understand that Edith is just screwed, and the rest walk.

Mon, 06/04/2012 - 15:15 | 2492998 Not Too Important
Not Too Important's picture

If I were her I'd start wearing bulletproof underwear.

Mon, 06/04/2012 - 12:37 | 2492343 Joebloinvestor
Joebloinvestor's picture

Gensler should LOSE HIS FUCKING JOB.

This little bald weasel shit was complicit.

I hope Corzine drags his ass down to when they get him in court.

Mon, 06/04/2012 - 12:43 | 2492363 Pike Bishop
Pike Bishop's picture

This doesn't make any sense.

In a Bankruptcy, the Trustee's responsibility is only to the failed entity.  To stabilize it,  make sure it doesn't get assets taken or moved during the filing, and to count it all up. Likewise, the Court is "pulled' from the normal judicial system to adjudicate over the consolidation and any disseminations (ala the pos JPM). The Trustee also has the right to request the Court for clawbacks on assets, but only ones that sneaked or were pushed out the door, after the filing.

Neither the Court, nor the Trustee, have any legal duty to represent the interests of any people who may have been defrauded by the entity, nor the interests of The People who supposedly have criminal laws against outright thievery, and their citizens being molested from the rear with their pants down around their ankles.

The person(s) who is supposed to be present during these proceedings to represent these interests, is the "Receiver". One of the things he would do for the clients and the Court is identify both civil and criminal actionable behavior on the part of the entity.

The Trustee can request of to the courts (not the Bankruptcy court) to also be the Receiver, but this is usually done right at the beginning. Also, representatives of the inflamed rectal-passage clients can apply to the courts to be the Receiver.

Representatives of the MFG clients did make requests to be Receiver for the proceedings, and were denied. I am told the rulings were consistent with the applicable laws.

And if one can't conceive how this could be so fucked-up, all they have to do is look at the Bankruptcy Law changes which were made in 2005. Their bent to change Personal Bankruptcy into lifetime Serfdom, was only matched by their efforts to ensure a walk-away for liability-shielded corporate/financial entities and their conspiring blowers-of-dogs management.

So, Gidden's insight is welcome, but he's not in a position to actually do anything, beyond refer his opinion as Trustee, to the appropriate authorities.

The tell here is that Gidden's "whys" are interesting, but he actually adds nothing that us Commoner retards (as they like to think of us) couldn't already see, no matter how hard everybody burned evidence points and veiled the thing in bread and circuses.

With a final note, that the appropriate authorities have done exactly dick to this point, and what was to be done, has been completed without even a pretense of criminal charges.

FWIW, I am a reporter, not a lawyer, but have actually talked to Bankruptcy lawyers, who in their opinion think this thing smells so bad, that what you see to date is about all we're going to get.

Mon, 06/04/2012 - 13:32 | 2492584 Boxed Merlot
Boxed Merlot's picture

Do you really think the former FBI director will allow a suit to be filed during an election year? Teneo premiums and political contributions made by the Honorable J. Corzine are the equivalent of "Honor Among Thieves". The politburo has nothing on these people, in fact they're taking lessons.

Mon, 06/04/2012 - 15:21 | 2493024 paracap
paracap's picture

What about indicting Gary Gensler, titular head of CFTC for adding and abetting, collusion and fraud?

Mon, 06/04/2012 - 15:24 | 2493035 PontifexMaximus
PontifexMaximus's picture

As long as Corzine has his ass covered by Gary Gensler, no harm can happen to him.

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