Creeping Towards Justice for Corzine?

As if the loss of customer funds wasn’t bad enough, we’ve had to spend the past year knowing that Jon Corzine, architect of MF Global’s collapse, was a free man. Conspiracy theories raged – why did this former Obama-bundling New Jersey-governing Wall Street insider appear to be immune to prosecution? And more than a few people we’ve talked to hold a serious grudge against this man…we certainly can’t blame them.

We don’t want to build our hopes up only to face disappointment, but we can’t help but feel a glimmer of anticipation now that a report from the House Financial Services Committee lays the blame for MFG’s fall squarely on Corzine (emphasis ours):

As MF Global’s chief executive, Corzine was responsible for ensuring that the company maintained integrated systems and controls for managing the company’s liquidity and protecting customer funds.  However, under Corzine’s tenure, the company’s cash management, liquidity monitoring, and regulatory compliance functions remained fragmented among several of the company’s departments.  MF Global lacked any formal liquidity management framework, and the company could not fully assess and anticipate its liquidity needs.  Under Corzine’s leadership, the company failed to address concerns raised in an internal audit suggesting that MF Global’s liquidity tracking and forecasting capabilities lagged behind the firm’s evolving business needs.   Consequently, MF Global was  unable to coordinate its activities during the liquidity crisis in its final days of operation.  As the company struggled to find additional liquidity, company employees identified excess company funds held in customer accounts.  However, because they did not have an accurate accounting of the amount of customer funds the company held, they withdrew customer funds as well as company funds.  Prosecutors and MF Global’s regulators will determine whether the  company or its employees violated laws or regulations when these withdrawals were made.  However, the responsibility for failing to maintain the systems and controls necessary to protect customer funds rests with Corzine.  This failure represented a dereliction of his duty as MF Global’s Chairman and CEO.

Granted, it’s not much a revelation that Corzine is responsible for driving the company into the ground – and there’s a big leap between being a bad business person and being a criminal – but what gives us hope is the report’s conclusion that the responsibility for failing to guarantee the sanctity of segregated funds also lies with Corzine.

Does this mean we can expect a criminal case against Corzine? We’re not holding our breath, but we’ll gladly take this as a step in the right direction.

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Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

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