Topic: Scoop for a journalist!

[charlesoakwood]

The gist is not hard to surmise but a clean translation would be nice.

Scoop for a journalist! MF Global Inflated Margins
Posted by Ann Barnhardt - October 31, AD 2011 7:05 PM MST

Um, Journalists? ZeroHedge people? Mr. Denninger? Market-Ticker forum people? You might want to pick this up and triple check me on this.

Okay, the NY Times and Reuters are reporting the MF Global was tapping customer seg funds to prop up its proprietary positions, which is just about the biggest crime an FCM can commit, right? I saw in a ZeroHedge thread that back in April MF was charging initial margin requirements at 175% of the exchange. So, I decided to cruise on over to the MF Global website and pull up their latest margin requirement guide and compare that to my clearing firm's rates.

Ho-ho-ho. Johnny Corzine was charging massive overages on margin requirements relative to the Exchange's SPAN requirements. And guys, every SPAN margin that I am quoting below is the HIGHER SPEC MARGIN, not hedge. Um, now we know why. Some comparisons:

Corn: MF $3640 SPAN: $2365 = 53.9% overage
Soybeans: MF $5500 SPAN: $3375 = 63.0% overage
Wheat: MF: $3825 SPAN: $3040 = 25.8% overage
Unleaded Gas: MF: $11340 SPAN: $9115 = 24.4% overage
Crude Oil: MF: $9000 SPAN: $8100 = 11.1% overage
Live Cattle: MF: $3780 SPAN: $1620 = 133% overage
30-Year Bonds: MF: $5208 SPAN: $4185 = 24.4% overage

Note how the smaller ag contracts are more heavily inflated than the uber-competitive HUGE contracts like Crude Oil and Bonds.

Here are the two URLs I used:

MF Global's Margin Page (PULL THIS DOWN BEFORE THEY TAKE DOWN THE WEBSITE!)
http://margins.mfglobaldirect.co.uk/futures/margins2.cfm

MF Global's Margin Page (PULL THIS DOWN BEFORE THEY TAKE DOWN THE WEBSITE!)

Here is the URL for my clearing firm's margins:

http://www.efutures.com/traders/contract_specs.php

Compare and contrast. It looks like MF massively inflated margin requirements so that Corzine could tap the overage between the Exchange's SPAN requirement and the MF Global requirement, and use that difference to prop up his proprietary trades. There ARE NOT WORDS in the English or Greek languages to describe how illegal this is.

Someone please pick this up and run with it. PLEASE.

[IronDioPriest]

I understand the words but not their meaning. Doesn't sound good though.

[charlesoakwood]

Here's the previous post:

Uh-oh. MF Global has missing Customer Seg Funds.
Posted by Ann Barnhardt - October 31, AD 2011 6:28 PM MST
The Litterbox Liner of Record is reporting tonight that the reason the MF Global 11th hour sale fell apart in the wee hours last night is because due diligence audits have revealed that CUSTOMER FUNDS ARE MISSING to the tune of about $700 million.

Yep. It appears that ol' Johnny Corzine moved excess (not tied up in margin) customer cash in order to prop up his proprietary positions.

If this SOB isn't sent to prison for life, then there should be a national general strike. If Corzine is made SEC TREAS, militias should form, muster and march, and states should start seceding from the Union. And I'm not kidding.

New York Times citation HERE.
http://dealbook.nytimes.com/2011/10/31/regulators-investigating-mf-global/?hp

Here is the URL for a ZeroHedge.com piece citing Reuters stating the MF Global is refusing to turn over its books - even though the company is dead. In other words, Corzine has ordered the shredding in order to protect himself and maintain plausible deniability. My God. If MF Global was tapping what has heretofore been utterly SACROSANCT, namely customer segregated funds, and the Regulators either didn't catch it or allowed them to do it, then the entire system could lose customer confidence and collapse. Every FCM on the PLANET had damn well better be able to prove the integrity of its customer segregated funds IMMEDIATELY.

http://www.zerohedge.com/news/panic-behind-mf-scenes-company-refuses-disclose-information-regulators-even-death

[Sectionhand]

The liberal media may not be able to cover Corzine's ass when the SEC or DOJ (might) start looking into this .

[Libertas]

"The information contained herein was provided by sources which we believe to be accurate and reliable. MF Global Ltd makes no guarantees explicit or implied as to its accuracy. Margins are subject to change without notice. Contact your MF Global Direct Order Specialist or Account Executive for the latest information. Margin calls will be verbal only and must be satisfied by wire transfer or banker's draft. Large positions concentrated in a single market may be subject to higher margin requirements. MF Global Direct reserves the right to verify all orders entered during the night before they are executed. Past performance is no guarantee of future results and will not necessarily be repeated. Seasonal trades merely attempt to identify a seasonal tendency and should not be construed as an offer or solicitation to buy or sell any investment. Your investment may be affected by exchange rate variations. Trading futures involves the risk of loss. You may lose more than the amount originally invested and you may have to pay more later. You should not invest in such products unless satisfied that they are suitable for you. MF Global Direct or its associates may have already undertaken or may in future undertake an own account transaction in respect of any future. MF Global Direct or its associates may have a position or holding in the product concerned or in a related product and has or may have a material interest in such products. The market opinions and recommendations expressed herein are those of MF Global Direct and are not necessarily those of any other entity within MF Global Ltd. The above figures do not allow for brokerage or slippage on entry or exit. MF Global Direct is a trading name used by MF Global Ltd, which is regulated by the Financial Services Authority for futures trading."

Heh!  CYA's of this magnitude should have people running away!

Oh, and regarding the misuse of customer cash?  Talk about epic fiduciary failure and outright theft!  Calls for nothing less than all of the guilty officers getting sent to Federal pound-me-in-the-ass prison!

I recall the ZH article on their refusal to share thier books, no doubt the shredders were humming overtime.  Probably more because Corzine got his $12.1m and God knows being one of The Chosen People he should not be held accountable for the source of that payoff!

http://www.zerohedge.com/news/did-jon-corzine-just-get-121-million-golden-parachute

This is theft, period.

Little wonder the MFM wants to pick this up!  No doubt you scratch hard enough and Wall St players in The Regime will have connections, wouldn't those morons in the OWS like that?  Nah, the latter is clueless, just like the MFM likes 'em!

 

[Castaway]

A classic case of money buying his way out in the making.   It sure appears any of us would be doing jail time under the law. 

[Pandora]

UPDATE:

It's pretty much official. MF clients who have had their money stolen will get absolutely no relief from the Federal Government. The propaganda line they are using is that the MF theft of client funds represents "the freedom to fail". Yes, that's right. The CFTC and Obama regime are going to wash their hands of the entire thing - even though MF's audit was under the jurisdiction of the CFTC - and then point to the fact that the government did not intervene on behalf of the clients as PROOF of their "dedication to free market capitalism".

Full citation here.

So Corzine took a massive suicidal position on European PIIG bonds with, I'm assuming, the big banks as the counterparty.

And let's be crystal clear on one thing: that son of a bitch Corzine knew EXACTLY what he was doing. This isn't a case of "stupid". This is stone-cold malice aforethought.

When the MF position got bad, Corzine stole the cash in the segregated MF customer accounts and sent it to the big banks, which will now send a cut to Obama. And the CFTC, who, along with the Chicago Mercantile Exchange, were the responsible regulatory bodies, is now calling this a simple case of firm failure and a shining example of capitalism.

THIS coming from the same Obama regime who has been handing out $500 million dollar government "loans" right and left to fake solar companies set up by political cronies that they KNEW would fail, were set up to fail, and were purely a means to loot the United States Treasury. The gall of these Marxist scumbags to turn around and lecture anyone on capitalism and "freedom to fail" is beyond the pale. It's just evil. That's what it is. It's evil incarnate.

Up next: Look for all MF clients to be branded and vilified by the Obama regime and the media as uber-wealthy "1%" greedy fat-cats who deserved to lose their money. After all, only evil, greedy billionaires trade futures.

Yeah, like my friend in Abilene, Texas who works his butt off as an cattle order buyer. Or my friend in Meade, KS who backgrounds feeder cattle. Yeah. They're "billionaires" who deserve to have their money stolen.

They're systematically looting the country.

[BMG]

http://hotair.com/archives/2011/11/04/will-corzine-connection-kill-obamas-occupy-strategy/

Corzine looks an awful lot like the so-called 1% that the Occupy Movement despises.  Democrats, especially Barack Obama, had hoped to ride that class-warfare populism to electoral victory in 2012, or at least ride it long enough to avoid electoral disaster.  However, as the Washington Post reported earlier this week, they’re going to have to ride a very long way to distance themselves from MF Global, and especially Jon Corzine himself.

[Libertas]

They better nab his criminal ass before he flees the country!  Or before Obama's people Fort Marcy Park his ass!

http://www.washingtonpost.com/politics/mf-global-ties-awkward-for-obama-campaign/2011/11/02/gIQA9w5ogM_print.html

[charlesoakwood]

Corzine is out and has hired a criminal lawyer.

[Libertas]

Even his lawyer is a criminal!

 

[IronDioPriest]

Little to no media attention whatsoever. Only the bare minimum obligatory stories chronicling the event.

[charlesoakwood]

He's already given up his 12 million,
there's trouble in paradise.

[Pandora]

More from Ann Barnhardton the sequence of events ......

... with, first, a recap:

Corzine aggressively lobbied the CFTC earlier this year to "allow" MF to "borrow" customer funds. This is utterly inappropriate, unheard of, and proves that Corzine acted with malice aforethought and the CFTC knew exactly what he was doing - because he lobbied them to let him do it, and the CFTC capitulated. {On "a proposed rule {that} would have restricted a complicated transaction that allowed MF Global in essence to borrow money from its own customers. Brokerage firms are allowed to use customers’ money to earn interest, not unlike banks, but this rule would have outlawed using customer funds for a loan to the firm itself. - P} 

...

Corzine took customer seg funds, "loaned" that money to the company, and then he proceeded to LOAD UP on PIIG paper which every sentient person on earth knew was worthless and would only spiral towards default.

.... And now, the consequences:

Brokers like me are required to keep a certain amount of money "parked" to satisfy minimum net capital requirements. The way it is usually done is that the IIB puts that minimum amount (or more) in an escrow account with their clearing FCM. This way, the IIB has their minimum net capital parked in a very safe place (ahem, we thought) and easily accounted for, AND the FCM informally views that money as a "security deposit" that can be tapped in the event that the broker has either a big trading error (it happens) or if a nasty client hangs a broker with a debit in their account and skates.

So, what the regulators are now saying is that any broker who had their minimum capital cash parked with MF Global must now call that cash non-current (because they can't get at it) AND that they MUST give it a 40% haircut on their books. So all of these brokers and other clearing firms that contracted to MF and thus had capital parked with them must now pump at least that haircut amount back into a cash account SOMEWHERE just to get themselves back to the minimum net capital requirements. If they can't do it, they will be in violation and could get their license pulled.

**Remember, I have no connection to MF. I clear through a company called Penson, and they are holding my minimum net capital requirement plus some extry. I'm writing about this so that you all can see what the spillover and cancer-like nature of this is. This could still spread throughout the system and there may yet be casualties because of this. Corzine has seriously, seriously messed with a lot of people's lives and livelihoods.

The brokers parked the required amount of money with MF Global; Corzine "borrowed" the money, gambled and lost it on a really bad "investment"; now all those brokers have to take a 40% hit plus scramble around to replace the money.

[AlanS]

The brokers parked the required amount of money with MF Global; Corzine "borrowed" the money, gambled and lost it on a really bad "investment"; now all those brokers have to take a 40% hit plus scramble around to replace the money.

And yet there hasn't been an arrest. WTF are they waiting for?

[charlesoakwood]

The 40% off the top is Obama's vig, right?

[Pandora]

The brokers parked the required amount of money with MF Global; Corzine "borrowed" the money, gambled and lost it on a really bad "investment"; now all those brokers have to take a 40% hit plus scramble around to replace the money.

And yet there hasn't been an arrest. WTF are they waiting for?

Who is "they"?  The DOJ?  That oughter answer yer question.  Besides, scuttlebutt is Corzine was in line to replace Geithner.  Now?  I dunno.

[AlanS]

Who is "they"?  The DOJ?  That oughter answer yer question.  Besides, scuttlebutt is Corzine was in line to replace Geithner.  Now?  I dunno.

I guess Holder is too busy covering his ass from F&F.

[Libertas]

“I simply do not know where the money is, or why the accounts have not been reconciled to date,” - John Corzine.

Yeah, uhh huh!

Get ready to also say "I don't know where I am, it's dark, clammy and cold and smells like wet fur, vomit and excrement"!

 

http://www.washingtonpost.com/business/economy/jon-corzine-to-tell-house-panel-he-doesnt-know-where-customers-money-went/2011/12/07/gIQAwLUleO_story.html?hpid=z1

[charlesoakwood]

His mind is jello.