magical mystery tours

  • 21 Nov 2011 at 2:46 PM

What? No One Ever Said Math Was Their Forte

The trustee overseeing the wind-down of MF Global Holdings Ltd.’s brokerage said Monday that more than $1.2 billion in customer funds could be missing from the failed firm, more than double the original estimate of missing cash. [NYP]

In the 2+ weeks since MF Global filed for bankruptcy protection, much has been written about Jon Corzine’s penchant for making wild bets, which worked out fine while he was at Goldman Sachs, where risk managers are empowered to stand up to employees putting the firm/bonus pool at risk, but not so much at MF-G, where he was a man on a mission. If JSC could turn back time…he’d still be JSC and he still would’ve had that little voice, down his plums, telling him to risk it all on Eurozone debt, which in turn would’ve caused various people to freak out, start a run on the bank and drive it into its current state of affairs. Separately though? This business with the customer funds that were desegregated from the firm’s own money and which are currently “missing,” despite several manhunts and “magical mystery tours” to find it? It didn’t have to be that way and maybe it wouldn’t have been if someone had been forced to dust off his series 24 books and review the section on “customer accounts,” before cramming into a test center and sitting for the exam alongside all the other scrubs, sweating through his sweater vest over getting at least 70% correct. Read more »

Late last week, as Jon Corzine attempted to sell MF Global, it was reported that that probably wasn’t going to happen on account of the fact that those who’d taken a look at MF’s books weren’t comfortable with the approximately $600 million in customer funds that had gone “missing.” Days later, despite a manhunt for the money and a false alarm at JPMorgan, the cash still has not yet turned up. For his part, Bart Chilton, a commission at the CFTC, is pretty pissed. “We shouldn’t have to go on this magical mystery tour looking for the loot. It shouldn’t have taken this long,” he said at an energy-trading conference in Houston. “For us, job one is always–no excuses–to ensure that customer funds are held sacrosanct. In this case, as the Stones sing, we ‘got no satisfaction.’” Possibly tripping on magic, Chilton, pictured at left, concluded that: “It’s a distinct possibility, some would say probability, that somebody has done something with the money, and that it’s not going to be ‘all of a sudden discovered’ with an innocent explanation.”

So….okay. We’ll play along. Where is the “loot” and what was “done” to it? Read more »