New Reforms Under Discussion in Wake of MF Global

[Ad Orientem]

(Reuters) - Four months after U.S. futures broker MF Global collapsed, roughly $1.6 billion in customer money is still missing, trading volumes are down, and the futures industry is looking for ways to restore confidence.

The U.S. Commodity Futures Trading Commission is due to hold a roundtable in Washington DC on Wednesday and Thursday to discuss how to better protect customer funds. Here are some of the more notable regulatory fixes currently under discussion:

* Make MF Global customers whole: Arguing that the industry will stay flat on its back unless all MF Global customers get every cent of their money back, two new members of the National Futures Association board proposed a novel solution: assess a fee on NFA members, and use the proceeds to secure a loan to cover the shortfall. The NFA is a quasi-regulatory agency funded by the industry and responsible for registering all futures brokers and overseeing some of them. The proposal, first floated in the weeks after MF Global's October 31 bankruptcy, drew immediate criticism from insiders who said it would create "moral hazard." But the two board members stuck with it, and this month formally asked the NFA board to study the possibility. NFA's president and chairman both declined to discuss the proposal with Reuters, and it's unclear whether it will gain traction.

* Neutralize the "Corzine defense": Jon Corzine, the former Goldman Sachs banker who ran MF Global as its CEO until shortly after the bankruptcy, told lawmakers that he was unaware of any large transfers of customer money that could have resulted in the giant shortfall of funds. The NFA is considering a rule that would force the top executives of futures brokerages to sign off on or otherwise take "personal responsibility" for transfers of excess customer funds over a certain set amount, according to NFA's Dan Driscoll.

Read the rest here.

[TripleB]

Why do I have the feeling I'm going to get f*cked by new reformed designed to help safeguard me, much like virtually every other law designed to protect me?

Perhaps if we legalized drugs and instead handed out harsh prison sentences to white collar criminals, we could reduce MF Global level fraud.

Instead of seizing the house of a suspected drug dealer's grandmother (without due process) how about seizing every car and house owned by all of Corzine's extended family and make him prove they didn't buy it with stolen MF Global money? And freeze all his assets, like we'd do with the suspected drug dealer so he can't afford a lawyer?

Then again if we did institute those laws, all of Congress would have all their assets seized and they would immediately go behind bars, so it's unlikely to ever come to pass.

[MediumTex]

Weren't Sarbanes-Oxley and Dodd-Frank supposed to prevent this sort of thing?

[clacy]

The simple way to prevent this in the next 20 years would be to hang Corzine.  Frankly, I would not shed any tears.

[murphy_p_t]

The simple way to prevent this in the next 20 years would be to hang Corzine.  Frankly, I would not shed any tears.

+10

btw...SOX & other regs, in my non-professional view, just add cost, erect barriers to competition, create more drags on business (lawyers, accountant fees, etc)

meanwhile, the thieves find the holes & regardless, have the connections to avoid real consequences

[TripleB]

Weren't Sarbanes-Oxley and Dodd-Frank supposed to prevent this sort of thing?

Democrat response: "They were but the republicans forced us to neuter the bills before passing the legislation rendering them ineffective."

Libertarian response: "SOX and Dodd-Frank had nothing to do with protecting US Citizens, and everything to do with creating barriers to entry to stabilize the market for large multinational corps that lobbied Congress to pass these 'protective' legislative acts."

[smurff]

http://dealbook.nytimes.com/2013/06/24/ ... 30625&_r=0

"U.S. Civil Charges Against Corzine Are Seen as Near"

Civil charges, but not criminal.  Let's see how far they get with this.

[smurff]

I guess they didn't go too far:

The complaint filed yesterday by the Commodity Futures Trading Commission seeks to punish Corzine for failing to supervise employees at MF Global Holdings Ltd., which transferred client funds to pay debts in a failed effort to save the firm. Less than a year after the October 2011 bankruptcy, Corzine considered starting a hedge fund, the New York Times reported in August, citing people with knowledge of his plans.

If the CFTC prevails against Corzine, “he’ll face a very serious challenge if he ever wants to be involved in the money-management business again,”? said Gregory Bruch, a law partner at Bruch Hanna LLP in Washington and former assistant enforcement director at the Securities and Exchange Commission. “They’re trying to bar him from the business, and that’s going to be a huge fight.”?

What?  No jail time?  He stole from the customers, had clear intent, the employees even talked among themselves about "taking the keys away" from him.  The customers have been deprived of their assets for two years come October.  It's pure disgrace for a former Senator and former Governor of New Jersey.  (Disgraceful for a Goldman Sachson, but I pretty much expect this kind of behavior from them--as well as from the criminal's Goldman Sachson buddies covering up for them after the fact.)  This is the kind of stuff that pi$$e$ people off.

Read about it at Bloomberg News:

http://www.bloomberg.com/news/2013-06-2 ... lapse.html

[Reub]

Corzine off the hook:

http://www.nypost.com/p/news/business/c ... Qd7VdtCLvM

I guess that there were too many pictures of him and the Prez floating around to indict him.

[Tyler]

Corzine off the hook

Not surprised.  Just disgusted. 

Some individuals are clearly too big to fail.  That nobody will be imprisoned for MF Global theft is itself a criminal act. 

[Ad Orientem]

I can't believe I'm typing this. But for the first time ever, I think I miss Elliot Spitzer. If he were still NY Attorney General people would be going to jail, or more likely would already be there.

[Libertarian666]

I can't believe I'm typing this. But for the first time ever, I think I miss Elliot Spitzer. If he were still NY Attorney General people would be going to jail, or more likely would already be there.

Of course. Which is why he isn't still the Attorney General.

[Ad Orientem]

I can't believe I'm typing this. But for the first time ever, I think I miss Elliot Spitzer. If he were still NY Attorney General people would be going to jail, or more likely would already be there.

Of course. Which is why he isn't still the Attorney General.

I think that has more to do with the fact that he was elected Governor of New York and promptly got caught in a very compromising position (both personally and legally).

[Libertarian666]

I can't believe I'm typing this. But for the first time ever, I think I miss Elliot Spitzer. If he were still NY Attorney General people would be going to jail, or more likely would already be there.

Of course. Which is why he isn't still the Attorney General.

I think that has more to do with the fact that he was elected Governor of New York and promptly got caught in a very compromising position (both personally and legally).

Oops, sorry, my mistake. What I meant was that the reason he was driven from office was due to his history of not letting Wall Street get away with EVERYTHING.

Or did you not notice that none of the other clients of that madam were exposed? I'm sure he wasn't the only public figure, just the only public figure that needed to be removed from office.

[Ad Orientem]

Of course. Which is why he isn't still the Attorney General.

I think that has more to do with the fact that he was elected Governor of New York and promptly got caught in a very compromising position (both personally and legally).

Oops, sorry, my mistake. What I meant was that the reason he was driven from office was due to his history of not letting Wall Street get away with EVERYTHING.

Or did you not notice that none of the other clients of that madam were exposed? I'm sure he wasn't the only public figure, just the only public figure that needed to be removed from office.

Good points.

[Reub]

Could it have had something to do with Spitzer's black socks?

[Ad Orientem]

It's a racket. Those guys are all crooks.

-Al Capone explaining why he avoided Wall Street for investments.