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Who Gave Permission To A Bankrupt MF Global To Sell Italian Bonds To JPM At A 5% Discount To Market Value?

Tyler Durden's picture


We already knew previously that shortly after it filed for bankruptcy, George Soros bought $2 billion in Italian bonds from the bankrupt MF Global. One thing we did not know was the terms of the purchase. Today, the WSJ has disclosed another facet of the bankruptcy which like Lehman will expose gigabytes of dirt on the corrupt US financial system. Namely, that after liquidating, MF sold Italian bonds - the culprit that ultimately led to the bank's bankruptcy - to none other than JP Morgan and "one large hedge fund."So far so good. Where it gets disturbing is that as the WSJ discloses, "buyers paid about 89 cents on the dollar for the Italian bonds, compared with a market price of about 94 cents at the time, according to the trader who bought them...Today, those bonds trade at more than 96 cents, according to Tradeweb." Our question is first, why did the bankrupt MF Global estate proceed to unload post-filing assets and under whose discretion: after all the company had entered bankruptcy, and it is up to the estate, which includes bondholders and other stakeholders to determine what assets and under what conditions, can be liquidated. Did MF Global believe that the same exemption from the law that it apparently thought was applicable to its pre-petition, was also valid under bankruptcy? Because if the firm did not get prior-permission form a bankruptcy judge to liquidate these assets, this is an act far worse than commingling and even the firesale of Lehman's US Brokerage to Barclays for pennies on the dollar - this is flaunting bankruptcy law front and center.

Secondly, and perhaps just as important, who on the estate agreed to give JPM a 5% explicit discount to what the article notes was a fair price that is 5% higher and which by definition would have had bidders at that price. We hope someone in the Senate will take a quick look at this note, and the related WSJ article, and ask Messrs Corzine et al to provide some much needed clarity on this topic.


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Tue, 12/13/2011 - 15:05 | 1975087 Catullus
Catullus's picture

Will a couple of "i'm sorry" and "I'm not an expert on bankruptcy law" make this all go away? Because I know just the CEO to slick back his hair and arrogantly blow hot air up your ass

Tue, 12/13/2011 - 15:08 | 1975105 Silver Bug
Silver Bug's picture

The corruption runs deep, they have infiltrated almost every element of governement, the day will come although where they are held accountable for what they have done. Sadly I believe it is still a few years away.

Tue, 12/13/2011 - 15:19 | 1975154 Popo
Popo's picture

There's a word for misappropriating funds from a company (or estate) you work for:  EMBEZZLEMENT.

That's what this is.  Plain and simple EMBEZZLEMENT.

The co-mingling funds argument absolutely does not stand up post-bankruptcy.   This was theft.


Tue, 12/13/2011 - 15:23 | 1975206 Poetic injustice
Poetic injustice's picture

Please, please. Don't mix up laws written for serfs and laws written for those who have ascended.
Simple "I am sorry" is maximum sentence that those holy beings should be punished with.

Tue, 12/13/2011 - 15:32 | 1975249 King_of_simpletons
King_of_simpletons's picture

// who gave permission ..... ? //

This is Wall Street. They are doing God's work and they are above petty things like government and rule of law. They can plead the "FIF" and get away with murder. All they need to make sure is the current president's coffers is flush with election dollahs.

Tue, 12/13/2011 - 15:47 | 1975330 redpill
redpill's picture

I've listened to a good amount of these hearings, and I'm surprised none of the Senators ask them how many people in the company would even have the ability to transfer that much money in client funds.  It can't be that big of a list.

Tue, 12/13/2011 - 17:29 | 1975854 hannah
hannah's picture

i know for a FACT that the night janitor transfered $5bil from an account.....corzine is innocent!

Tue, 12/13/2011 - 18:21 | 1976176 hidingfromhelis
hidingfromhelis's picture

The way this is being whitwashed and delayed, and the fact that real crimes aren't being seriously investigated, I don't even think it's going to get to the point where we get the "few bad apples" excuse.  It won't even be necessary.

Tue, 12/13/2011 - 23:04 | 1977155 Real Money Wins
Real Money Wins's picture

As Captain Jack Sparrow would say "I'm having a thought Here!"

"What if they did a clawback on the purchase of the Italian bonds from JPM at a fair market value of say 96 cents!

 Sounds Fair to me."

And Barbossa says "Ah But Jack thats what lost ye yer money in the first place.

Companies are easier to steal from when their dead!"

Tue, 12/13/2011 - 15:35 | 1975277 narnia
narnia's picture

Fraudulent Conveyance: a transfer of property that is made to swindle, hinder, or delay a creditor, or to put such property beyond his or her reach.

Tue, 12/13/2011 - 20:52 | 1976743 mkkby
mkkby's picture

Claw it back, baby.  Claw the muther fucker back.

Wed, 12/14/2011 - 00:55 | 1977535 Buck Johnson
Buck Johnson's picture

Our financial system is so corrupt and dysfunctional that the only way to fix it is to let it all implode and rebuild it again.

Tue, 12/13/2011 - 15:14 | 1975127 Elwood P Suggins
Elwood P Suggins's picture

Ask Corzine - why?  It'll just be more of the Clinton defense - don't remember, can't recall.  Hillary and Billary taught all these radical left wing Democrats how it's done.

Tue, 12/13/2011 - 15:20 | 1975146 Dr. Acula
Dr. Acula's picture

If he knows jack shit, you must acquit!

Tue, 12/13/2011 - 15:13 | 1975128 bigdumbnugly
bigdumbnugly's picture

permission?  we don't need no stinkin permission.

Tue, 12/13/2011 - 15:25 | 1975187 vast-dom
vast-dom's picture

Tyler et. al allow me to obvious in the face of general tonal naïveté of this article: the entire bond market operates under these preferential discounts -- this is how bond dealers function to date and the only difference here is there was a "seeming" dump in the face of insolvency. The keyword "dump" because if you tracked any bond dealer you'd see these kinds of "discounts" all day every day akin to congress legally insider trading. The profits come as insider multi-tiered discounts between "insider" traders and then end-purchaser ultimately scavenges and hopefully justifies the price differentials and junk bond insolvent product. But WTF do i know?

Tue, 12/13/2011 - 15:33 | 1975270 MsCreant
MsCreant's picture

If I hear that the money went to pay off folks who had funds on account with them that were co-mingled, I could at least understand it, they are trying to pay back what they should, first. Other wise NO, NO, NO, NO, NO, NO! 

Tue, 12/13/2011 - 15:06 | 1975088 oogs66
oogs66's picture

Money for nothing! And at that is some serious money!

Tue, 12/13/2011 - 15:06 | 1975089 YesWeKahn
YesWeKahn's picture


Tue, 12/13/2011 - 15:06 | 1975091 NOTW777
NOTW777's picture

if it was after BK filing and w/o court permission it is subject to being set aside and or the subject of contempt

Wed, 12/14/2011 - 00:18 | 1977441 Real Estate Geek
Real Estate Geek's picture

Hell hath no fury like a scorned Federal judge . . . especially if it's a she.

Tue, 12/13/2011 - 15:06 | 1975094 knight99
knight99's picture

im so fking numb to the corruption. The corrupt politicians are going to tell the corrupt banksters what to do. WTF is going on

Tue, 12/13/2011 - 15:06 | 1975095 DarkestPhoenix
DarkestPhoenix's picture

Clawback, bitchez!

Tue, 12/13/2011 - 15:06 | 1975098 GeneMarchbanks
GeneMarchbanks's picture

Was he asked about this?

Tue, 12/13/2011 - 15:06 | 1975099 oogs66
oogs66's picture

300 million bitchez

Tue, 12/13/2011 - 15:07 | 1975102 My Taint
My Taint's picture

Small haircut. Nothing to see here. Move along.

Tue, 12/13/2011 - 15:53 | 1975356 A Man without Q...
A Man without Qualities's picture

Exactly - the salesforce covering MFG realized there would be only limited business going forward and, well, they need to hit their revenue targets.   

I remember an incident with one of the client coverage guys on a very similar entity which collapsed owing to insolvency issues.  He laughed as he told me how he'd taken a huge margin for the unwinds and the client had been angry but "there was nothing he could do" - this is the ugly truth about the way it works and the unethical nature of investment banks...

Tue, 12/13/2011 - 15:08 | 1975103 silverserfer
silverserfer's picture


Hello ma'am how may i help you today?

Tue, 12/13/2011 - 15:07 | 1975104 tmosley
tmosley's picture

No rule of law what-so-ever.

Banana Republic of America.

Tue, 12/13/2011 - 16:04 | 1975439 tarsubil
tarsubil's picture

I will call it Costaguana. Man, a banana republic is normal. A free republic, equal protection under the law, upholding of contracts, that is abnormal. It was fun while it lasted.

Tue, 12/13/2011 - 15:08 | 1975106 Everybodys All ...
Everybodys All American's picture

Might I presume that this goes to the highest levels of government. Not much of a stretch is it? Would not this be called quid pro quo until you get called on it and then it's called RICO.

Tue, 12/13/2011 - 15:09 | 1975108 MFL8240
MFL8240's picture

The TRIBE led by the Scumbag Soros and JP Morgan insider Dimon do whatever the fuck they want and if you dont like it than tough shit.

Tue, 12/13/2011 - 16:24 | 1975525 NotApplicable
NotApplicable's picture

So... I generated a Scumbag Soros meme template, but cannot get it captioned due to an error message.

Here's the pic

My caption:


5% BELOW RETAIL (bottom)

But alas, my memegenerator fu is weak. :( (as are my MS Paint skillz)

Wed, 12/14/2011 - 14:27 | 1979590 combatsnoopy
combatsnoopy's picture

Corzine knows nothing! NADA. 

Just add Corzine and Soros' name to the mix and the "GOP" finally gets it's panties in a bunch over the greatest financial scandal in the history of the world... the CFTC under Wendy Graham, a NEOCON btw. and Rubin and Summers and Gensler- all part of this crime spree! Where was the GOP then? What did they think was gonna happen when you condone a crime? It keeps happening! This is partisan politics stalling necessary justice to return any integrity to the U.S. markets and a HUGE obstacle to economic recovery.  Bush and his clique condoned this scandal along with the S&L Crisis.  I'm NOT condoning Obama and Corzine, but the GOP and the Clinton crew needs to own up here as well.  Playing politics is for dummies. 

The courts have been doing nothing since 2003 (and before) about these crimes.  Why would Soros miss out? 2010/06/articles/subprime-litigation/an-updated-analysis-of-subprime-securities-suit-dismissal-motions/

***On Judge Levine's first week on the job, nearly twenty years ago, he came into my office and stated that he had promised Wendy Gramm, then Chairwoman of the Commission, that we would never rule in a complainant's favor.***
A review of his rulings will confirm that he has fulfilled his vow. Judge Levine, in the cynical guise of enforcing the rules, forces pro se complaints to run a hostile procedural gauntlet until they lose hope, and either withdraw their complaint or settle for a pittance, regardless of the merits of the case"*** 

Tue, 12/13/2011 - 15:09 | 1975109 wandstrasse
wandstrasse's picture

now THAT has style: to buy bonds of bankrupt state from a bankrupt company with crony discount...

Tue, 12/13/2011 - 15:10 | 1975114 rawsienna
rawsienna's picture

ACtiually - If true, they buyer may not "own" the bonds.  Unless of cousre it is Soros then breaking the rules will not matter. 


Tue, 12/13/2011 - 15:10 | 1975115 dexter_morgan
dexter_morgan's picture

That's good since Soros could use the discount savings to further his pro-America agenda no doubt.

Tue, 12/13/2011 - 15:12 | 1975122 IrritableBowels
Tue, 12/13/2011 - 15:35 | 1975279 MsCreant
MsCreant's picture

Tyler put up a thread on this.

Tue, 12/13/2011 - 20:04 | 1976569 Melin
Melin's picture

Congress fails to understand the market.  Go figure.

Tue, 12/13/2011 - 15:12 | 1975123 Eagle1
Eagle1's picture

It is called "flipping" in the Street. A quick profit for your friends and family at Christmas

Tue, 12/13/2011 - 15:12 | 1975125 PulauHantu29
PulauHantu29's picture

MF Clients better stock up on KY...lots of it.

Tue, 12/13/2011 - 15:15 | 1975134 Dr. Acula
Tue, 12/13/2011 - 15:53 | 1975359 rawsienna
rawsienna's picture

if story is true than trade did not happen.  Bankruptcy judge will rip itup

Tue, 12/13/2011 - 15:16 | 1975142 AldoHux_IV
AldoHux_IV's picture

And that's where the so-called good collateral winds up, like in 3 card monte, you think you know where the money is but it isn't until laws are broken, and shady back door deals are made that you find out that the money was literally stolen via liquidating sales.

This should implicate many people who should go to jail for outright theft, fraud, etc. How far it goes and how much justice will be served will be a function of how much ignorance there is amongst the general public.

The fed, banks, prime brokers, central banks, and broker dealers have engaged in some serious fraud that if genocidal policies like further stimulus (which will do nothing to stem the reversion to the mean in asset prices) won't do them in, this certainly will.



Tue, 12/13/2011 - 15:16 | 1975148 YesWeKahn
YesWeKahn's picture

no QE, no QE, no QE.

Tue, 12/13/2011 - 15:17 | 1975153 XitSam
XitSam's picture

"- this is flaunting bankruptcy law front and center."

These are bankers, the law doesn't apply to them.

Tue, 12/13/2011 - 15:21 | 1975179 PMakoi
PMakoi's picture

Really, what strikes me awfully hard, is that just before giving testimony, Corzine is asked to raise his hand and swear an oath to tell the "whole truth".  Farce, and the I never meant to hurt anyone or do anything illegal is completely lame.  Why doesn't he just tell the most truth and say, "I thought I could get away with it."

Tue, 12/13/2011 - 15:22 | 1975192 PMakoi
PMakoi's picture

and, please... when will some young Congressional aide walk through the scene and knock over that idiotic "honorable" sign???

Tue, 12/13/2011 - 15:30 | 1975252 JLee2027
JLee2027's picture

In today's day and age, Honorable = Despicable

Tue, 12/13/2011 - 16:47 | 1975626 XitSam
XitSam's picture

Did you note how one of the senators said "Mr. Corzine ... excuse me, Governor Corzine."

Tue, 12/13/2011 - 15:42 | 1975304 lizzy36
lizzy36's picture

Dick fuld said the same thing.

They get away with it. So why deviate from the program.

The future Treasury Secretary's reputation is in tatters. Alas he still has half a billion dollars, and lots of political friends. 

Wed, 12/14/2011 - 01:46 | 1977663 slewie the pi-rat
slewie the pi-rat's picture

"...still has half a billion dollars, and lots of political friends."

liz_Z, you're not teasing us w/ a possible re-make of The Martha Stewart Story, now, are you?

Tue, 12/13/2011 - 15:21 | 1975184 Hondo
Hondo's picture

He's off to see the wizard, the wonderful wizard of OZ

Tue, 12/13/2011 - 15:26 | 1975229 willien1derland
willien1derland's picture

Surely Soros will eventually take over the SEC or the Federal Reserve...a profit of $130,000,000 not bad & considering the fact that the bankruptcy administrator & the clients who have had their funds stolen OBVIOUSLY DO NOT NEED THE MONEY as MUCH AS MR. Soros...I formerly PROCLAIM THAT I MUST BE A DRONE & hereby request to be flown over WESTERN AFGHANISTAN which is code for IRAN....I am so tired of the is absolutely shameless

Tue, 12/13/2011 - 15:26 | 1975231 Legolas
Legolas's picture

Let's all get this information to the Senate Agriculture Committee.  It will then be on them if they don't pursue it.  Legal corruption is despicable.  Illegal corruption is inexcusable.

Tue, 12/13/2011 - 15:27 | 1975234 pineyard
pineyard's picture

My Friend .. dont ask such silly questions .. sorry

What You document is HOW the ANGLOSAXON FINANCIAL SHARKS OPERATE .. and have been operating for all the time ..I have been  informed ! I just didnt really know it ..precisely .. before NOW ... like so many other good people .. also in the US !

.. As when Charles de Gaulle called the BLUFF of the US regarding .. redeemability of the DOLLAR for  GOLD ... at that time by ANGLOSAXON MEDIA portrayed as almost a transformation of FRANCE into a TRAITOR ,,an aspiring COMMUNIST STATE .. You see .. my MEMORY hasnt totally failed me ... YET !

And what You describe is exactely ... what WE ... who can THINK EUROPE .. want to put an END to .

That process is DIFFICULT , because we have POWERFUL ENEMIES ... who use every DIRTY TRICK they can come up with  .. to avoid taking the consequences of their ill deeds.

But will be over my dead body and many other good people with me  .. if we will let them get away with that in perpetuity.... and I ... and others have STAMINA .. even when it looks impossible ........TRUST ME !


Tue, 12/13/2011 - 15:32 | 1975263 sabra1
sabra1's picture

we all know the globalists don't pay taxes. they collect taxes from the 99%, 'cause we let them! enough is enough people! global warming is a scam to collect even more taxes! i didn't know that God created earth, just to hand it over to satan's followers! WAKE UP PEOPLE! DO NOT PAY YOUR TAXES, GET YOUR MONEY OUT OF THE SYSTEM NOW!!!!

p.s.- hey globalists! you know what you'll be doing in  hell? you'll be sucking shit thru a straw! (heavenly angels told me!)

Tue, 12/13/2011 - 15:33 | 1975272 Forgiven
Forgiven's picture

Let me guess.  The delta between .94 and .89 on the deal adds up to $1.2 Billion. 

Tue, 12/13/2011 - 16:27 | 1975534 NotApplicable
NotApplicable's picture

He's not so much picking up nickels in front of the steam-roller, as he is picking them up with it, squishing all of the little people as he goes.

Tue, 12/13/2011 - 15:37 | 1975289 sitenine
sitenine's picture


Tue, 12/13/2011 - 15:43 | 1975305 Seasmoke
Seasmoke's picture

forget about clawback, Jamie Dimon needs a claw to his skull

Tue, 12/13/2011 - 15:43 | 1975308 BennyBoy
BennyBoy's picture

We are The Financial Elite.

And we'll do whatever the fuck we want.

Tue, 12/13/2011 - 15:49 | 1975341 Flammonde
Flammonde's picture

CORRUPTIO OPTIMI PESSIMA. The corruption of the best is worst. --Roman proverb [a fish starts smelling from its head]

Tue, 12/13/2011 - 15:55 | 1975374 jmcadg
jmcadg's picture

I really want to be locked in a room with the three MFG stooges. Give me 5 minutes. And when you open the door turf in that arrogant cunt Dimon. I want him even more.

Tue, 12/13/2011 - 16:04 | 1975438 Georgesblog
Georgesblog's picture

From the beginning, the MF Global failure is institutionalized embezzlement. If the investigation is a whitewash, silence is consent. Congress and the regulatory agencies would be complicit in the theft, by inaction and by dereliction of duty.

Tue, 12/13/2011 - 16:09 | 1975455 Absalon
Absalon's picture

Bankruptcy trustees seem to be unable to sell cash for par so it is no surprise that there was a discount to market in the sale of a liquid asset.

Tue, 12/13/2011 - 16:51 | 1975635 MarcusLCrassus
MarcusLCrassus's picture

They were just doing god's work. 

Tue, 12/13/2011 - 17:21 | 1975792 Rusty_Shackleford
Rusty_Shackleford's picture

There is no spoon.

Tue, 12/13/2011 - 17:38 | 1975920 MsCreant
MsCreant's picture

Yeah, I know. Still, the nothing points to something.

Tue, 12/13/2011 - 17:34 | 1975889 UnpatrioticHoarder
UnpatrioticHoarder's picture

It's "flout" the law not "flaunt" the law!!!

As in JP Morgan violating the law vs JP Morgan running around shouting "Look, look, isn't my law beautiful!"

Tue, 12/13/2011 - 19:36 | 1976478 nmewn
nmewn's picture

"Did MF Global believe that the same exemption from the law that it apparently thought was applicable to its pre-petition, was also valid under bankruptcy?"

Anyone who felt they had zero fiduciary duty (trust) regarding client accounts to use for their own personal bets would think the same about contract and bankruptcy law.

Perhaps he thought he was still a governor, who was still entrusted with special powers, so he continued to loot at will and make up the law as he went along to cover it

Criminal Gangs of New York is what we're dealing with here.

Wed, 12/14/2011 - 00:26 | 1977469 nathan1234
nathan1234's picture

It's time the Demon was put behind bars


Wed, 12/14/2011 - 02:24 | 1977728 nathan1234
nathan1234's picture

The Demon and the Don need to be put behind bars without further ado

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