Don’t Get Over MF Global


It has been about a year and a half since the Futures industry was shaken by the MF Global collapse and while many former MF customers are close to being made whole, there still has not been justice done for a crime that never should have occurred. Mr. Corzine is still a free man and still hasn’t even been sanctioned by regulatory bodies or banned from operating any registered entity.

I was reminded of this and somewhat heart broken in reading a blog on Futures Magazine’s website entitled “In Defense of Jon Corzine.

In it Susan Gidel a former executive with Lind Waldock, a large retail division of MF Global had a run in with a speaker angered by the lack of a prosecution against former MF Global Chairman and CEO Jon Corzine. While she expressed anger over the situation, which cost her her job, she concluded, “Get over it already. Did you have a million-dollar account there? Because if not, then me and many of my couple thousand colleagues probably were more harmed than you. We’ve moved on.  And so should you.”

I understand Susan was responding to an individual who was acting rude and perhaps had more of a political axe to grind. I also understand that Susan was a victim of this, a major victim whose dedication to the Lind Waldock brand had survived many trials including its disappearance for a time under Refco’s stewardship, but while she personally can forgive Mr. Corzine, if it is her wish, she should not ask others to move on.

It was painful to see as I spent so much effort trying to make sure we as an industry and more precisely Futures as an industry watchdog does not just get over it.

The “just get over it” line is particularly disturbing because it is what we as a nation have done countless times to our detriment through a dizzying series of financial frauds and misdeeds over the last 15 years or so. Frankly, it is the problem. Our willingness to move our attention to the next shiny object and not address serious crimes because it would be difficult to solve.

This notion that we can “just get over” criminal activity, perhaps apply some regulatory fines with the codicil that the perpetrator acknowledges the fine without accepting or denying responsibility for their action is the problem. It is why Mr. Corzine has not been charged with a crime or really even seriously investigated; it is why the largest banks in the world can spend countless of millions of dollars lobbying Congress to avoid regulations that address the financial disaster they created; it is why ratings agencies can downgrade U.S. debt a few years after they arguably where the most responsible parties for an economic disaster that created the pressures leading it to consider downgrading the U.S. debt!

It is why many of the major global investment banks can manipulate the Libor rate for years, helping them make hundreds of millions if not billions of dollars and those responsible where not even fired immediately and the banks got off with a fine. It is why large investment banks can have laundered money for drug cartels and transacted business with rogue states who support terrorists like Iran and can simply pay a fine and go on as business as usual.

And finally, it is why the New York Times can float a story that Mr. Corzine would not face criminal prosecution and may be set to launch his own hedge fund (didn’t he already do it with MF Global).

The whole point of our coverage, when I was directing it at Futures Magazine, was to say that ‘no we would not just get over it.’ That there was a crime and people responsible should be held accountable. Often, perhaps too much, we tagged stories, “where is the money.” We did this to try and hold regulators and industry leaders’ feet to the fire. To say customer money was stolen, money that should not have been at risk and we are not going to just let it go. To point out that our industry promised these customers that their segregated money was safe. I felt a personal responsibility to this as I had often written about the benefits of futures style segregation.

The whole point from our perspective is that this crime should not be allowed to fade away. That it was necessary to hold investigators’ feet to the fire. That is why we responded with such dismay at unsourced stories trying to minimize the crime; absolving Corzine and others of wrongdoing with mealy mouthed excuses and illogical conclusions like money simply vaporized.

The system simply cannot bare it. We have had analysts promoting stocks they knew were losers in order to gin up underwriting fees. We have had the largest Ponzi scheme in history hand delivered to the Securities and Exchange Commission 10 years before it eventually fell under its own weight and they did nothing. We have had major banks involved in money laundering for drug cartels and rogue regimes and get away with a fine. The cost of major fraud is a joke: a fine that probably does not equal the profit from the criminal enterprise with entities able to carry on without any further repercussions.

All these things have occurred and the wheels of justice have simply been greased by those responsible. We stood at the brink of financial collapse — a brink that is still visible — without any major prosecutions of those responsible.

Ask yourself this; given the profits earned by the major investments banks and others due to the major frauds of this century measured next to the cost paid in fines, employment, earning potential and jail time (or lack thereof) and tell me whether you think we will see more or less of it?

We live in a political age and every story will be used to try and get some political advantage but our job in the media is to tell the truth. It doesn’t or shouldn’t matter how many people have gotten away with crimes without being punished. It is a trend that has to stop. It can only end in a complete collapse of our economic system it we carry on this way.

The only reason the victims of MF Global have gotten most of their money back is because a group of Corzine’s victims — led by James Koutoulas and John Roe, founders of the Commodity Customer Coalition – stood up and said ‘we will not just let this go.’

It wasn’t due to the work of any political leaders or regulators responsible for not letting this happen, much to their shame. We are at this critical stage because we have just let all these things go. The next one could push us over the edge. As I said earlier, the system cannot bare anymore of this.

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