Corzine’s Missing Global MF Money May Have “Vaporized”

Posted by on Jan 30, 2012 at 10:50 am

I’m wondering: has anyone checked the coffers of Obama’s campaign for the missing money?

Nearly three months after MF Global Holdings collapsed, officials hunting for an estimated $1.2 billion in missing customer money increasingly believe that much of it might never be recovered, according to people familiar with the investigation.

As the sprawling probe that includes regulators, criminal and congressional investigators, and court-appointed trustees grinds on, the findings so far suggest that a “significant amount” of the money could have “vaporized” as a result of chaotic trading at MF Global during the week before the company’s Oct. 31 bankruptcy filing, a person close to the investigation was cited as saying Monday.

Many officials now believe certain employees at MF Global dipped into the “customer segregated account” that the New York company was supposed to keep separate from its own assets — and then used the money to meet demands for more collateral or to unfreeze assets at banks and other counterparties as they grew more concerned about their financial exposure to MF Global.

Investigators also are examining other scenarios that have gained traction in recent weeks, such as the possibility that MF Global suffered steep losses on investments made using customer money. Officials investigating the case have looked into whether such investments were appropriate under rules at the time.

As money poured out of MF Global, much of it likely passed through J.P. Morgan Chase and other banks where the securities firm had accounts, as well as trade-clearing partners such as Depository Trust & Clearing and LCH.Clearnet Group, people familiar with the matter said.

Just imagine if this kind of dough went missing from Bain Capital.

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3 Responses to “Corzine’s Missing Global MF Money May Have “Vaporized””

  1. chris on 30/30/12 at 6:14 pm

    I have been involved in a number of financial clean ups that required forensic accounting.

    To say, or repeat, the notion that the money “vaporized” is to profess utter ignorance of the subject on which one is reporting.

    MF is probably one of the easier paper trails to follow given the size of transactions, limited time frame of the major fraud and likely use of wire transfers for almost all the transactions.

    The question is whether prosecutors will vigorously follow the trails that are lit up. At some point, the transfers get down to a size that is not worth following but you have dozens upon dozens of complicit individuals and companies that should be facing criminal and civil penalties before claiming the cost/benefit of pursuit is exhausted.

    I keep waiting for some Soros related party and Marc Rich to pop up in the money laundering that took place. A typical rouse for the commodity crowd would be to misprice a major transaction using an offshore shell and skimming most the transaction with the Marc Rich type taking about a quarter of the booty for facilitating the laundering. So far, Soros has only popped up as the buyer for a big chunk of distressed assets at a fire sale price.