Very Discrete Prosecutor Discretion- No charges for MF Global.

Authorities are winding down their criminal investigation of the failed brokarage firm, MF Global, and despite the lack of oversight and the loss of more than $1 billion in customer funds, it now seems unlikely that anyone at the firm will face criminal charges.

The New York Times is reporting this morning that after ten months of investigation by federal prosecutors, sources say there isn’t even enough evidence to charge any of the firm’s executives in a criminal probe. The company may have failed spectacularly when it came to oversight and risk management, but the losses cannot be chalked up to outright fraud.

The company placed a grossly outsized bet (more than $6 billion worth) on the health of the European debt market last year and when it went south, the firm “borrowed” money from the accounts of its customers to try and salvage its own losses. Most of the blame for those trades fell on its CEO (and ex-New Jersey governor) Jon Corzine, and while his reputation and firm are ruined, it seems he will escape any legal sanction. He could still face massive civil lawsuits or fines from regulators who have a lower standard than a criminal prosecution, but jail isn’t in the cards.

via No One Will Charged With a Crime for the MF Global Collapse – Yahoo! News.

Being a mega-bundler for Obama has its advantages.

“Borrowing” from customer accounts to cover losses in the firm accounts is THE big no-no in any fiduciary relationship. There is simply no excuse for it, in any way, shape, or form.

Any financial fiduciary has, first and foremost, a duty to his clients, not his firm. If your firm goes broke, but the client accounts are untouched, you still have the honor (and lack of criminality) of having fulfilled your duty.

Watch any episode of CNBC’s “American Greed” and there’s a fair chance you’ll see exactly this type of ponzi-scheme featured. And since those folks aren’t mega-bundlers for Obama, they get sent to jail.

The failure of the SEC to bring charges (especially in the age of SarbOx) reeks of political corruption. Shame on Corzine, shame on the SEC, and shame on the Obama Administration.

4 thoughts on “Very Discrete Prosecutor Discretion- No charges for MF Global.”

  1. I wish I could say I am surprised. Maybe I’m a little surprised that it too so long to make this decision. We all knew this would be the result the day we learned of the MFG failure.

    1. Given Obama’s tendency to throw people under the bus, I was a tad surprised. But I guess since Corzine is still bringing in the money, he’s above the law.

  2. You know, had Solyndra or MF Global occurred with a Republican administration, I expect it would have been covered on the nightly news every night until people were jailed and then brought up every time similar topics hit the news. Under Obama? Nothing to see here. Move along. Thanks, Mr. Holder!

  3. I live in the State of New Jersey. I don’t care which party the individual belongs to at the time or even know. If an individual breaks the law, no matter what his office or former office was, he should be treated under the same guidelines as specified by law. If a US President, either in or out of office, benefits by this breaker of the law, should be convicted and sentenced, with no possibility of pardon or parole for the duration of his sentence. If a politician intervenes, then the politician should receive the same sentence. There are no “Executive Orders” which should be able to circumvent this action.

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