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Thread: Clearing house steals money from customers, then goes bankrupt.

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    Default Clearing house steals money from customers, then goes bankrupt.

    Right, so I can't help myself today. Apparently, a giant/enormous clearinghouse somehow managed to use its clients' money to play the stock market, and lost. Clearly illegal, I thought...

    http://www.chicagotribune.com/busine...,4783467.story

    Quote Originally Posted by Reuters
    1:46 p.m. CDT, November 1, 2011
    MF Global Holdings Ltd., the futures broker that filed for bankruptcy protection on Monday, has admitted to using its clients' money as its financial troubles mounted, Associated Press has reported, citing a U.S. official.

    An MF Global executive made the admission to federal regulators in a phone call early Monday, AP reported.

    MF Global did not keep its customers' money separate from its own, CME Group CEO Craig Donohue said on Tuesday.

    "CME has determined MF Global is not in compliance with Commodity Futures Trading Commission and CME customer segregation requirements," CME Group Inc Chief Executive Craig Donohue said.

    Mixing customer funds with company money violates a key tenet of futures brokerage. Donohue's statement on Tuesday raises questions about statements from CME and other exchanges as recently as Friday that MF Global was a clearing member "in good standing."

    "It is always the case that customers have the risk of other customer losses in the customer segregation pool," Donohue told investors on a conference call. "There's always the risk as well that customer funds are not properly protected."

    MF Global became the most high-profile victim so far of the euro zone debt crisis, and revived memories of the collapse of Lehman Brothers in 2008 that triggered turmoil in global financial markets.

    Federal regulators have discovered that hundreds of millions of dollars in customer money had gone missing from MF Global, the New York Times reported.

    Donohue said CME is looking into exactly what happened at MF Global, but cannot now precisely determined the scope of its violation.

    He said any losses at MF Global "doesn't really present a clearinghouse issue."

    I don't understand this though:
    "It is always the case that customers have the risk of other customer losses in the customer segregation pool," Donohue told investors on a conference call. "There's always the risk as well that customer funds are not properly protected."
    Is he saying this is an expected risk, or it is a risk because the company could be doing this illegally?

    Jail really helps markets, I think. People need to go to jail.

    Speaking of jail. It's an interesting contrast with the sandwich story, innit? Couple accidentally "steals" $5 worth of over-priced sandwiches: they get arrested. Top executives literally steal what is probably going to be hundreds of millions if not billions of dollars: IT'S OKAY!
    Last edited by agamemnus; 11-01-2011 at 08:22 PM.

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    Oh, one more tidbit. The CEO is Jon Corzine, the extra-super-rich librulz former governor of New Jersey.

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    I'm going to reply to myself again...

    Perhaps this is actually overblown and what happened was that customers' accounts had margins that the customers couldn't fill (due to Greece debt deal write-offs), and the company ate the loss somehow?

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    Didn't look into the details, but it's sure a sign of how scary the Greek situation is.
    Greece shows us that there is a kind of politician worse than the ones that break their election promises; the ones that keep their election promises.

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    Administrator Dreadnaught's Avatar
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    So let's summarize the recent career of John Corzine, the CEO of this bankrupt firm

    1) Played an insider's game at Goldman to become CEO and took the company public.

    2) Used the fortune from a Goldman IPO to buy endorsements and run an insider's run for the US Senate.

    3) Won election as the Governor of New Jersey. Played the ultimate insider's game by sleeping with the head of a state union. Attends state union rallies exhorting them to demand more money from the state he runs.

    4) Links-up with a clearing house. Makes a massive bet on European bonds by assuming they are an insider's game and the politicians will always bail-out the banks.

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    Senior Member GGT's Avatar
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    That pretty much sums it up.

    You forgot to add that NJ racked up a lot of debt while he was guv, that he (allegedly) used client money to buy up those euro bonds and swaps at MF Global--while lobbying regulators to lighten up on rules for the $600 Trillion derivatives market, and (allegedly) can't find $600 million. Rumor has it he negotiated a golden parachute package with a tidy bonus, right before filing bankruptcy. What a guy.

    The FBI is investigating, along with SEC/CFTC. His legal fees will be enormous, but since he's estimated to be worth over $400 million, he'll probably get the best justice money can buy.

    And you wonder what the OWS protests are about, huh.

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    All Worship Ragnarök Loki's Avatar
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    Quote Originally Posted by GGT View Post
    And you wonder what the OWS protests are about, huh.
    I agree. The OWS protests are all about making unsupported assumptions unfazed by the facts and and reaching conclusions without any available data.
    Hope is the denial of reality

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    Senior Member GGT's Avatar
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    Quote Originally Posted by Loki View Post
    I agree. The OWS protests are all about making unsupported assumptions unfazed by the facts and and reaching conclusions without any available data.
    So, you're up to the task of proving:

    (1) Which assumptions are being made by the OWS protestors (recognizing they're not a monolithic group, of course)

    .....Well, it ends there, because you haven't shown you know or understand any of "their assumptions". Let alone why the OWS movement reaches beyond NYC's Zuccotti Park, into several US states and cities. Even beyond US borders, including other nations and continents.

    Kind of hard to take the stance that your assumptions are better than theirs. Dontchathink.

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    De Oppresso Liber CitizenCain's Avatar
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    Quote Originally Posted by GGT View Post
    That pretty much sums it up.

    You forgot to add that NJ racked up a lot of debt while he was guv, that he (allegedly) used client money to buy up those euro bonds and swaps at MF Global--while lobbying regulators to lighten up on rules for the $600 Trillion derivatives market, and (allegedly) can't find $600 million. Rumor has it he negotiated a golden parachute package with a tidy bonus, right before filing bankruptcy. What a guy.

    The FBI is investigating, along with SEC/CFTC. His legal fees will be enormous, but since he's estimated to be worth over $400 million, he'll probably get the best justice money can buy.

    And you wonder what the OWS protests are about, huh.
    So, to summarize, you think that the solution to government corruption is more government. Impeccable reasoning and a sure-fire plan for success, as always.

    Quote Originally Posted by Loki View Post
    I agree. The OWS protests are all about making unsupported assumptions unfazed by the facts and and reaching conclusions without any available data.
    No, to the extent that they're about anything more than free pizza and pot, they're about jealousy. Privileged kids in the upper 5 to 10% of the country in income/wealth, bitching about not being in the top 1%. Jealousy, plain and simple. Which is why they can't nail down anything resembling an agenda or a platform or anything other than "the richest 1% of people are richer than us, wah!! "
    "I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them."

    "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants."

    -- Thomas Jefferson: American Founding Father, clairvoyant and seditious traitor.

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    All Worship Ragnarök Loki's Avatar
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    Like I said in the other thread, these are people who live in the same buildings/neighborhoods as the top 1%, but have to content themselves with a Benz instead of a Lamborghini and vacations in Hawaii instead of in the Maldives.
    Hope is the denial of reality

  11. #11
    De Oppresso Liber CitizenCain's Avatar
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    Say, was it here that I came across the article on income disparity in industrialized nations basically being a crock-of-shit, (along the "shut up and keep your jealousy to yourselves" line) or was that somewhere else? If it was somewhere else, it seems like something that ought to be posted here, on the topic of privileged whiners protesting the slightly more privileged.
    "I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them."

    "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants."

    -- Thomas Jefferson: American Founding Father, clairvoyant and seditious traitor.

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    Senior Member GGT's Avatar
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    Quote Originally Posted by CitizenCain View Post
    So, to summarize, you think that the solution to government corruption is more government. Impeccable reasoning and a sure-fire plan for success, as always.
    No. I think the solution to government and corporate collusion, and its corruption, is to sever the revolving door, make campaign finance publicly funded, ban PACs and Super PACS, reverse the Citizens United decision, and Get Money Out of legislative powers: http://www.getmoneyout.com/

    If you think this is about free pizza and pot, or wealth envy, or whatever fuck you're making up....maybe you'd do 'better' to ask yourself what kind of faux reality bubble you're living in, and how much longer your irrational, anti-thetical mindset can last, before it comes tumbling down. When no amount of guns can make it better.

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    Quote Originally Posted by GGT View Post
    So, you're up to the task of proving:

    (1) Which assumptions are being made by the OWS protestors (recognizing they're not a monolithic group, of course)

    .....Well, it ends there, because you haven't shown you know or understand any of "their assumptions". Let alone why the OWS movement reaches beyond NYC's Zuccotti Park, into several US states and cities. Even beyond US borders, including other nations and continents.

    Kind of hard to take the stance that your assumptions are better than theirs. Dontchathink.
    It's not encouraging how much you're willing to praise a "movement" while also claiming that it is impossible to understand.

  14. #14
    Senior Member GGT's Avatar
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    Quote Originally Posted by Dreadnaught View Post
    It's not encouraging how much you're willing to praise a "movement" while also claiming that it is impossible to understand.
    I'm the one who says the movement portrays more than one, simple, all-encompassing issue. Other than anger and generally being fed up.

    Despite the Occupy Wall Street "slogan", and media's desire to crunch it into easy sound bites and headlines (for folks like you who insist it's "Anti-Capitalism") or Loki pronouncing it's .. all about making unsupported assumptions unfazed by the facts and and reaching conclusions without any available data)... it's not impossible to understand.


    Back on topic regarding Corzine and MF Global, here are a couple of good articles:

    http://ftalphaville.ft.com/blog/2011...s-of-repo-105/

    http://blogs.reuters.com/bethany-mcl...nes-mf-global/


    But ya know, we have our priorities (for the 99%). Get caught carrying some pot in your pocket and that can land you in jail for a couple of years. White collar criminals from the financial world won't be your cellmate, though. They have enough millions to buy probation or house arrest on Park Avenue, or might spend a few months perfecting their golf swing in minimum security dorms.

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    SEŃOR Member Aimless's Avatar
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    Silly GGT, they won't be punished at all.
    “Humanity's greatest advances are not in its discoveries, but in how those discoveries are applied to reduce inequity.”
    — Bill Gates

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    All Worship Ragnarök Loki's Avatar
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    Apparently white collar workers now make up 1% of the population.

    And we all know that Madoff is spending a few months in prison.
    Hope is the denial of reality

  17. #17
    Senior Member GGT's Avatar
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    Quote Originally Posted by Loki View Post
    Apparently white collar workers now make up 1% of the population.

    And we all know that Madoff is spending a few months in prison.
    Is there a statistical measure for your cherry-picking reading style? White collar workers aren't automatically white collar criminals from the financial world.

    And we all know Madoff perpetrated his crimes over decades, "injured" thousands of people (including philanthropic groups and endowments), and isn't doing time for any of his cohorts.

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    All Worship Ragnarök Loki's Avatar
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    So you want him to spend more than a lifetime in prison? Seriously?
    Hope is the denial of reality

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    Nihilist Nessus's Avatar
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    Given how gung-ho Americans are for boiling inmates alive, or at the very least having them repeatedly raped, I'd guess the recent reporting on his time in the Big House leaves many an American wanting...
    In the future, the Berlin wall will be a mile high, and made of steel. You too will be made to crawl, to lick children's blood from jackboots. There will be no creativity, only productivity. Instead of love there will be fear and distrust, instead of surrender there will be submission. Contact will be replaced with isolation, and joy with shame. Hope will cease to exist as a concept. The Earth will be covered with steel and concrete. There will be an electronic policeman in every head. Your children will be born in chains, live only to serve, and die in anguish and ignorance.
    The universe we observe has precisely the properties we should expect if there is, at bottom, no design, no purpose, no evil, no good, nothing but blind, pitiless indifference.

  20. #20
    All Worship Ragnarök Loki's Avatar
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    She said he's not doing any time. I'm not quite sure how life in prison doesn't meet that criterion.
    Hope is the denial of reality

  21. #21
    Nihilist Nessus's Avatar
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    Look I am trying really hard hear to turn this into a pointless argument about rape in your prison system, OK

    Can you work with me here

    It's rape, dude, we all love rape
    In the future, the Berlin wall will be a mile high, and made of steel. You too will be made to crawl, to lick children's blood from jackboots. There will be no creativity, only productivity. Instead of love there will be fear and distrust, instead of surrender there will be submission. Contact will be replaced with isolation, and joy with shame. Hope will cease to exist as a concept. The Earth will be covered with steel and concrete. There will be an electronic policeman in every head. Your children will be born in chains, live only to serve, and die in anguish and ignorance.
    The universe we observe has precisely the properties we should expect if there is, at bottom, no design, no purpose, no evil, no good, nothing but blind, pitiless indifference.

  22. #22
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    Only the anti-Wall Street people agree with you unfortunately. Then again, they are the 99%...
    Hope is the denial of reality

  23. #23
    Nihilist Nessus's Avatar
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    Ice burn!

    No but really, Krugman had some nice oligarchy stuff out this week. Funny guy, huh?
    In the future, the Berlin wall will be a mile high, and made of steel. You too will be made to crawl, to lick children's blood from jackboots. There will be no creativity, only productivity. Instead of love there will be fear and distrust, instead of surrender there will be submission. Contact will be replaced with isolation, and joy with shame. Hope will cease to exist as a concept. The Earth will be covered with steel and concrete. There will be an electronic policeman in every head. Your children will be born in chains, live only to serve, and die in anguish and ignorance.
    The universe we observe has precisely the properties we should expect if there is, at bottom, no design, no purpose, no evil, no good, nothing but blind, pitiless indifference.

  24. #24
    All Worship Ragnarök Loki's Avatar
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    I wonder if Krugman is in the 99%...
    Hope is the denial of reality

  25. #25
    Nihilist Nessus's Avatar
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    Are you suggesting a fondness for champagne?
    In the future, the Berlin wall will be a mile high, and made of steel. You too will be made to crawl, to lick children's blood from jackboots. There will be no creativity, only productivity. Instead of love there will be fear and distrust, instead of surrender there will be submission. Contact will be replaced with isolation, and joy with shame. Hope will cease to exist as a concept. The Earth will be covered with steel and concrete. There will be an electronic policeman in every head. Your children will be born in chains, live only to serve, and die in anguish and ignorance.
    The universe we observe has precisely the properties we should expect if there is, at bottom, no design, no purpose, no evil, no good, nothing but blind, pitiless indifference.

  26. #26
    All Worship Ragnarök Loki's Avatar
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    More likely for Chateau Lafite 1787.
    Hope is the denial of reality

  27. #27
    De Oppresso Liber CitizenCain's Avatar
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    Quote Originally Posted by GGT View Post
    No. I think the solution to government and corporate collusion, and its corruption, is to sever the revolving door, make campaign finance publicly funded, ban PACs and Super PACS, reverse the Citizens United decision, and Get Money Out of legislative powers: http://www.getmoneyout.com/
    So meaningless buzzwords that don't equate to anything actionable... and repealing teh 1st amendment.

    Got it.

    You were doing a better job when you claimed that the solution to government was government.

    Quote Originally Posted by GGT View Post
    ask yourself what kind of faux reality bubble you're living in, and how much longer your irrational, anti-thetical mindset can last, before it comes tumbling down.
    Holy-mother-of-Jesus-butt-fucking-a-house-cat-Christ, woman. Spit out the LSD. That's a mirror you're looking into.

    Quote Originally Posted by Nessus View Post
    Are you suggesting a fondness for champagne?
    What, now? You're not really claiming Krugman's a conservative, are you? (Champagne conservative, limousine liberal.)
    "I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them."

    "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants."

    -- Thomas Jefferson: American Founding Father, clairvoyant and seditious traitor.

  28. #28
    Senior Member Enoch the Red's Avatar
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    Quote Originally Posted by CitizenCain View Post
    What, now? You're not really claiming Krugman's a conservative, are you? (Champagne conservative, limousine liberal.)
    I think Nessus prefers champagne Socialist.

  29. #29
    Nihilist Nessus's Avatar
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    Quote Originally Posted by Enoch the Red View Post
    I think Nessus prefers champagne Socialist.
    It's hardly my preference, but admittedly the other side of the aisle has brandied it about less now that Chambalaya's less active.
    In the future, the Berlin wall will be a mile high, and made of steel. You too will be made to crawl, to lick children's blood from jackboots. There will be no creativity, only productivity. Instead of love there will be fear and distrust, instead of surrender there will be submission. Contact will be replaced with isolation, and joy with shame. Hope will cease to exist as a concept. The Earth will be covered with steel and concrete. There will be an electronic policeman in every head. Your children will be born in chains, live only to serve, and die in anguish and ignorance.
    The universe we observe has precisely the properties we should expect if there is, at bottom, no design, no purpose, no evil, no good, nothing but blind, pitiless indifference.

  30. #30
    Senior Member GGT's Avatar
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    Quote Originally Posted by Loki View Post
    She said he's not doing any time. I'm not quite sure how life in prison doesn't meet that criterion.
    No, this is another example or your erratic and cherry-picking reading comprehension.

    Quote Originally Posted by GGT View Post
    And we all know Madoff perpetrated his crimes over decades, "injured" thousands of people (including philanthropic groups and endowments), and isn't doing time for any of his cohorts.
    Madoff is serving time for his own criminal activity. Putting him behind bars doesn't mean his cohorts (or co-conspirators) are off the hook. And how many of them have been identified or prosecuted? NONE, as far as we know.

    Most Incredible Ponzi scheme ever, spanning decades and involving Billions of Dollars trading hands, without one single co-conspirator being fingered for their involvement. Bernie may be a smart con artist, but he's not that smart.

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