MF Global May Escape Criminal Prosecution

It looks like MF Global might just get away with it. That's because prosecutors are having trouble figuring out what exactly "it" is.

Even as a Chicago grand jury has begun to probe MF Global, it seems increasingly unlikely that federal authorities will bring a criminal case against anyone involved in the firm’s fall, according to the New York Times.

The company lost more than $1 billion in customer funds as it collapsed. Yet investigators are having trouble finding evidence in thousands of documents that MF Global workers intentionally misused the customer money, instead the huge loss was the result of a chaotic environment and a lack of risk control, the NYT reports, citing people close to the investigation.

The company's former CEO Jon Corzine, who resigned after the collapse, shocked those watching the case when he told Congress in December: "I simply do not know where the money is" in reference to the missing customer funds. A variety of clients, including, as the WSJ reported, farmers across the country, were squeezed after the money they invested with MF Global was suddenly gone.

MF Global is just one of many firms that may escape criminal prosecution despite causing customers to lose big. Government officials haven't successfully prosecuted a single big executive or major Wall Street firm for their involvement in the 2008 financial crisis. In addition, federal prosecution of financial fraud fell to a 20-year low in 2011, according to a November report from a watchdog group.

Though they've seemingly changed their tune, authorities were eager to prosecute MF Global, shortly after it collapsed in October thanks in large part to risky bets on European debt. FBI officials said in November that the agency was interested in probing allegations that the company didn't protect customer funds by keeping them separate from the company’s own money. In addition, federal prosecutors in Chicago and Manhattan initially rushed to make a claim, according to the NYT.

While authorities may be wary of prosecuting MF Global, some regulators have taken steps in an aim to ensure something similar doesn’t happen again. The Commodity Futures Trading Commission passed a rule in December restricting how firms can use customers' money. But not everyone is on board. The Chairman of the CME Group, which had overseen MF Global in the lead up to its collapse, claimed earlier this month that its self-regulation system worked "flawlessly."

Comments

[bippeeii]

08:22 PM on 03/09/2012

Well there are a couple of problems. First while the papers first reported $600 million, then $1.2 Billion, then $1.6 Billion missing, according to the trustee in bankruptcy as reported by the AP "Most of the $1.2 billion previously reported missing has been traced to customer accounts and banks.virtually all of the money has been found."

So you falsely report "$1 Billion lost" and then ask why prosecutors aren't doing something about "it." There is no "it." You just failed to get your facts straight. The second problem is also a reporting problem. "Stealing" from customer accounts might be a charge, as appealaway suggested in a comment below, except, nothing was stolen.

Are all HuffPost "reporters" that out of touch with reality?

Thought HuffPost was better than that but the slant on this "story" is of the "Fox News ilk.
This peculiar brand of uncivil discourse is tearing this country apart, making people think that everyone ewxcept them is a crook, while lining the "reporters" pockets with billions of dollars.

[appeallawy]

05:11 PM on 03/09/2012

Taking money out of customer accounts and using the same for general company purposes is embezzlement and grand larceny. It's no mystery. If that's indeed what occurred -- and it was reported that's what happened. Have the facts been spun? Concealed? or just IGNORED.

[TomDi]

11:20 PM on 03/05/2012

Obama/Holder crony capitalism at it's finest.

[iridium53]

04:55 PM on 03/01/2012

Did anyone ever actually think that Corzine wouldn't get of free?

Have any banksters been sent to jail by Schapiro, Holder and Mueller?

[jwoww]

02:28 PM on 03/01/2012

but the DOJ will sure find time prosecuting border patrol agents and officers for arresting illegal drug dealers coming across the Arizona line.

[beerbagger]

12:05 PM on 03/01/2012

Apparently there's a need for some laws that are easier to understand and that carry harsh penalties.

[blindhammer]

11:32 AM on 03/01/2012

Of course it will. The rule of law has broken down in the United States.

[bc906]

10:50 AM on 03/01/2012

This is because Corzine was Obamas biggest fund raiser on Wall Street and a huge Liberal force. Its an election year and Obama does not want to be associated with another white collar crook. Corzine should be in Jail and everyone knows it

[krist6804]

10:10 AM on 03/01/2012

Just because the authorities are unable to find the missing 1 billion dollars of MF Global lost clients’ money, does not mean the IRS won’t find your $500.00 unreported MF Global dividend.

The authorities always look harder for missing $$ further down the economic latter.

[John Derrick]

09:46 AM on 03/01/2012

The fact that the DOJ cannot find guilt in their investigation should tell all of us that the DOJ is not doing their job. Washington seemingly has become nothing more than a dysfunctional bunch of welfare recipients. There is not accountability from bottom to top....and those thieves whose fraud is tied to Washington have nothing to fear from prosecutors. It's time to change Washington.

[krist6804]

09:43 AM on 03/01/2012

This is very interesting:

Authorities most likely will not bring criminal charges against anyone because they can’t figure out what really happened and yet they are taking steps to see to it, that it, never happens again, the thing they do not know how it happened?

What a bunch of crapola! It sounds like the white collar crime police are silk collar criminals.

[rhymney]

11:26 PM on 02/29/2012

How hard is this? The customer's money were to be kept separately from the firm's money, anyone transferring custodial account money and is unable to pay it back should go to jail. Start prosecuting people and suddenly they'll start remembering. Someone signed the wire transfers, start there and work your way up to Corzine employee by employee.

[GoldwaterKid]

11:24 PM on 02/29/2012

The part of this whole story, that the average person doesn't seem to know, is that this was 'funds', that belonged to someone else.

Kind of like your savings, in your local bank. Moved by the investment company, and then somehow lost. Opps, too bad.

[jstanavgguy]

11:09 PM on 02/29/2012

Does the fact that a corrupt enterprise, run by a former Democrat Senator and Governor, is not likely to be prosecuted for the crimes that they committed really surprise anyone?

[castlemike]

11:06 PM on 02/29/2012

TBTF To Fail and To Politically Connected To Jail.

http://bbs.chinadaily.com.cn/thread-734021-1-1.html

Timothy Geithner was detained for questioning by New York police on February 24th and was released after giving evidence about many high level financial criminals, according to New York police sources. “In most cases we have to slap people to get them to talk but in his case we had to slap him to shut him up,” one of the interrogators joked. Geithner has been released but is accompanied at all times by an armed deputy to make sure he does not leave the country. Former Prime Minister Silvio Berlusconi of Italy is also proving to be very talkative, sources in Europe say. Berlusconi has been released. Meanwhile, meetings between White Dragon Society representatives and South Korean government officials last week in Seoul were very productive.

http://www.youtube.com/watch?v=q5j6Yk0qAgQ&feature=player_embedded