Tags: Bart Chilton, CFTC, Charlie Gasparino, Jon Corzine, weak tea
As you may have heard, earlier today the Commodity Futures Trading Commission charged Jon Stevens Corzine for (allegedly!) misusing nearly $1 billion in customer funds at MF Global. According to the CFTC, this was able to happen in large part because JSC “did not enhance MF Global’s deficient systems and controls sufficiently to ensure that the firm’s increasing reliance on FCM cash did not result in unlawful uses of customer money.” This pissed off Fox Business reporter Charlie Gasparino for two reasons, both of which he shared with CFTC Commissioner Bart Chilton this afternoon:
1. He wrote about MF Global’s insufficient controls two years ago, ergo, the CFTC could’ve and should’ve brought the charges against Corzine way back then, instead of dragging its ass. In fact, Chaz says that on his watch, we would’ve seen action within one week’s time.
2. No fraud charges? What’s that about? Add it to the list of things CG would get done in his capacity as Senior Kicker of Ass and Taker Of Names. Read more »
Tags: CFTC, Edith O'Brien, Jon Corzine, MF Global
The thing is that when you run a brokerage company and it goes and loses $1bn of customer money, the CFTC really ought to charge you with “fail[ing] to supervise diligently the activities of [your] officers, employees, and agents,” no? At least? There are various views of Jon Corzine’s role in MF Global’s efforts to misplace a billion dollars – did he intentionally misuse customer funds? was he aggressive but above-board? just confused? – but no one is going around saying “oh, yeah, Corzine was really on the ball there protecting customer money.” You’re just irreducibly not supposed to lose a billion dollars in customer money, and if you do, “failure to supervise diligently” is pretty much the kindest possible description.
Anyway here is the CFTC press release and complaint against Corzine and Edith O’Brien, the MF Global assistant treasurer and general fall guy. There have been approximately eight thousand lengthy blow-by-blows of the MF Global implosion by now, and I would understand if you didn’t want to read this one; I sure didn’t. Unlike the others, though, the CFTC complaint is enlivened by recorded telephone conversations. In which Edith O’Brien does not come off well: Read more »
Tags: bons mots from Michel Barnier, CFTC, Regulation, swaps
International regulatory amity, bipartisan concerns and common sense be damned: The (probably) outgoing CFTC chair is going to see to it that these swaps-trading rules go into effect next month, damn the consequences. Read more »
Tags: Amanda Renteria, be careful what you wish for, CFTC, Gary Gensler
Gary Gensler is very close to getting his wish to not be CFTC chairman anymore. As for his wish for a better job than CFTC chairman, well, this certainly can’t have helped. Read more »
Tags: Bart Chilton, CFTC, SEFs, swap execution facilities, swaps
Are you as puzzled as I am by the mild brouhaha over the CFTC’s new swap execution facility rules? Basically the rules require that most swaps be traded on pseudo-exchange-y-type things called “swap execution facilities,” which are run either by an order-book system or a “request for quote” system. The RFQ system would require anyone wanting to trade to send an RFQ to at least 3 (2 for “an initial phase-in period”) potential counterparties. The original proposal was for that to be five counterparties. The revised proposal has caused a striking amount of rage, as various people have confused themselves into thinking that of course it’s obvious that every transaction should be an auction among five potential counterparties. Presumably few of those people orient their daily life that way. I don’t, anyway; I get lunch at Chipotle every day because it’s next door to Dealbreaker HQ.1
On the other hand people who think that customers should choose how many quotes to get don’t like the 3-quote compromise either. Here’s a SIFMA guy whining about it, and he doesn’t seem all that wrong:
SIFMA’s Asset Management Group continues to believe that any minimum-bid requirement will tie the hands of portfolio managers who already have a fiduciary obligation to serve the best interests of their clients. Requiring portfolio managers to broadcast their trading position more widely than they would otherwise choose could negatively impact the prevailing price of their trades, making it more expensive and difficult to hedge their clients’ risk. SIFMA strongly believes that professional investment managers, and not the government, should determine appropriate trading strategy.
The thing that trading is is, deciding how broadly to expose your order. Wider exposure gets you more and potentially better bids, but at the risk of getting front-run or picked off or otherwise abused.2 I realize that I won’t persuade everyone by quoting a trading textbook but here: Read more »
Tags: Bart Chilton, CFTC, Derivatives, folksy argumentation, transaction tax
If Congress won’t act to curb derivatives speculation (and fund his own agency) with a transaction fee, Bart Chilton will. Read more »