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Here It Is, The Jon Corzine Quote of the Week

Here it is, the quote of the week!

"Choices made by Jon Corzine during his tenure as chairman and CEO sealed MF Global's fate."

No, sorry, that's not it. Here it is, the quote of the week!

"All of the firm's significant business decisions were subject to review, debate and approval by MF Global's board. At all times, Mr. Corzine acted in good faith and did what he believed was necessary to turn around MF Global."

The first quote is from written remarks penned by Rep. Randy Neugebauer, a Republican from Texas and the chairman of the oversight panel of the investigative subcommittee of the House Financial Services Committee, which just last week issued its 100-page "report" on what happened at MF Global over a year ago.

The latter quote is from some PR (that's public relations) hack representing Jon Corzine.

Now, look, I'm not going to waste time talking about what's really important here. Sure, you guys seem to care a lot about the facts, but I'm not going to muck up this opinion space with any.

Facts clearly aren't that important.

Because if they were, I would be talking about how the bankruptcy trustee overseeing the charred carcass of MF Global already said – back in his June report – that it was Mr. Corzine's aggressive trading strategy and a lack of internal oversight that led to MF Global's downfall.

Or maybe I'd be talking about how the firm's lack of internal oversight was caused by Corzine stripping the company's chief risk officer, who formerly reported directly to Corzine, of his ability to monitor Corzine's giant European sovereign debt trades. And how the CEO punted oversight of his trades to the board of directors (of which he was chairman), who he handpicked to sleep on the job.

Or I'd be talking about how Corzine strong-armed his outside auditors PricewaterhouseCoopers to account for his trades in such a way that hid their potential to reduce the firm's profitability.

Or that Corzine exploited a loophole in CFTC rules to "use customer money like an A.T.M" to finance his massively leveraged, speculative bets on the always uncertain outcome of which direction European sovereign instruments are going to trade.

Or I'd even be pointing out that Corzine started making these huge side-pocket bets even while MF's core commodity business was struggling and unprofitable.

No, I'm just not going to waste your time with indisputable facts that don't tell the whole story.

Because here's the whole story, according to the new House report.

It Wasn't All Jon Corzine's Fault…??

If the regulators had their act together, none of this would have had to happen.

It was the regulators who "dunnit."

After all, the Federal Reserve Bank of New York bestowed on MF Global its imprimatur of excellence and unabiding faith in 2011. That's when it granted MF "primary dealer" status. That coveted position, in a tiny club, let MF Global deal directly with the NY Fed when they conducted their open market trading operations.

And if the Fed says you're cool, no one is going to bully you or say you aren't obviously a flush insider, darling.

After all, it was the CFTC that hid, I mean had, the loophole through which MF sucked its customers' money to finance its own trading book.

It was also the CFTC that instructed MF to plug a $220 million hole in its customer accounts – which somehow wasn't anything like the $1.6 billion of customer money that's still unaccounted for.

No – and this is not just my opinion, which is all that's important here – it's the opinion of the House subcommittee that if the regulators had been better at their jobs, then poor old Jon Corzine wouldn't have been in a position to make these bad judgment calls.

Because, after all, he was the chairman and CEO and prone to being human. But darn it, if the regulators had just caught his mistakes in time, all would be right with the world, and poor Jon Corzine would now be on top of the president's list to sit on the throne marked "Secretary of the Treasury."

At least now we know, thanks to the report, that there's something wrong with the regulators running the regulatory bodies here in the U.S.

As far as Jon-boy, he is just the poster boy for ineffectual regulation. And I'm sure that his board of directors will eventually come clean and admit that they missed the opportunity to catch the falling knives they didn't see stabbing their poor chairman in the back.

Thank goodness for the truth sometimes mysteriously enshrined in the ether of opinion.

So… what's your opinion on how the regulators screwed up poor Jon's political ambitions?

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About the Author

Shah Gilani is the Event Trading Specialist for Money Map Press. He provides specific trading recommendations in Capital Wave Forecast, where he predicts gigantic "waves" of money forming and shows you how to play them for the biggest gains. In Zenith Trading Circle Shah reveals the worst companies in the markets - right from his coveted Bankruptcy Almanac - and how readers can trade them over and over again for huge gains. He also writes our most talked-about publication, Wall Street Insights & Indictments, where he reveals how Wall Street's high-stakes game is really played.

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  1. Mr. Smith | November 20, 2012

    Why isn't this guy in prison? Just before the collapse of MF Global I was thinking of investing with them and was given a personal tour of thier trading floor. Thankfully I hesitated and didn't get screwed like all those employees I saw who lost thier jobs and the many investors who suddenly had thier accounts disappear. If Courzine doesn't take the fall for this then I don't know what to think of the futures industry. Or, I guess it's all in who you know after all.
    Mr. Smith

  2. Joe | November 20, 2012

    I agree that Corzine and possible others should have done jail time, a crime was committed here. Someone authorized the unlawful transfer of customer monies. When is our judicial system going to send a message that there is a price to pay for defrauding clients and breaking the law? Time and time again these CEO’s recklessly gamble with client money, and if it goes south, at worst walk away with multimillion dollar settlements.
    There also needs to be some reform in the makeup of companies Board of Directors to ensure independence.
    Nice article.

  3. Kirk Bryan | November 20, 2012

    John Corzine was just acting like a politician. His time as Governor and then Senator gave him hypoxia and he thought he was still in government. Consequently he behaved like a brain damaged politician.

  4. Ed Invests | November 21, 2012

    All of us (meaning maybe half or so) believe we need bank regulators to prevent things like what happened in the mid to late 2000's and things like MF. Were the regulations you cited too loose, or were they just not inforced? I guess a larger question is who is qualified to set the regs and enforce them? Finding qualified people without banking or political ties would be difficult. Any suggestions on what group might fit the job? Universities and Economics profs? Maybe someone to oversee and regulate the regulators? Are there honest people left?

  5. Employee #2009 | December 12, 2012

    You guys have it all wrong.. Yes Jon made mistakes. They certainly werent criminal in nature. It's very hard to accuse the man of wrong doing when using the tools available to him as CEO and every other CEO at similiar firms after the fact. Ultimatley the biggest mistake he made was under estimating the regulatory enviornment and more importanlty the rating agencies and how they can ultimately put you out of business once the market looses confidence in your ablitiy to fund yourself in the marketplace. Regulators dont regulate rating agencies and as anyone who witnessed the Bear Stearns and Lehman collapes knows its a steep slope once u start getting downgraded. The big difference is those firms had so much balance sheet pressure they became insolvent. MF was not insolvent .They just needed time to work out of the Euroupean reverse to maturity trades once the rating agencies demanded they be put back on balance sheet. Its noteworthy that these derivative positions had been carried off balance sheet for years at wall st firms. The real crime is that MF didnt need to go out of business, and 3000 jobs would have been saved given enough time. No politician or news paper has asked the simple question, did MF have to go ?? Taking a step back and looking at the facts the answer is NO..

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