MF Global Might Be MF Fraud | Points and Figures

News just went across the wires that MF Global($MF) didn’t segregate their customer funds. The bankruptcy just escalated from really bad business decisions, to fraud.

When you’re a trader and put up money into your account, those funds are segregated from every other account in the firm. If the firm goes kaput, or a fellow trader goes bust, your money is safe. All you do is create a new account at a new firm, transfer the money and positions and you are in business.

Segregating those funds is a sacred trust between trader and firm. There is no higher calling for a firm. Your customer accounts are sacrosanct. You might earn a little yield over night on the excess in the overnight Repo market, but you never put those funds at risk. That’s the traders job.

MF Global may have put them at risk. That’s fraud, and if they in fact did it there should be people doing a perp walk.

via MF Global Might Be MF Fraud | Points and Figures.

There’s another, more familiar term for organizations that fail to segregate costumer account funds- Ponzi Scheme.

Corzine needs to go to jail.

Further, this is further evidence that Obama has absolutely no clue how finance and the economy works, and his judgment in choosing advisers and subordinates is similarly faulty.

2 thoughts on “MF Global Might Be MF Fraud | Points and Figures”

  1. I’ve long thought Corzine was corrupt. Most don’t prove it beyond doubt. Corzine may just have done so.

    Perp walk is the least they should do to him. I just wonder how much protection money he’s paid to the Obamanoids.

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