Corzine Will Not Be Prosecuted

There are a few ways that one can look at the headline today in the NY Times.

First, you could say this is great for the futures industry. There was simply a misunderstanding of where money went and there was no harm no foul. Billions in equity value at ICE ($ICE) and CME ($CME) should immediately return to their stock prices since the industry is in great shape. Volume and confidence ought to come back to the marketplace. All is well.

There is no need for an insurance policy on segregated funds, because MF didn’t steal them. No new rules. Where they were stolen at PFG, justice was served. We can be pollyanna’s and forget about the whole thing. Just like when you were a little kid and had do overs in sandlot baseball.

Second, you could be totally cynical and say Corzine had enough money and political power to avoid prosecution where Russell Wasendorf didn’t. One poor sap tried to kill himself and will spend a lot of time in the pokey while the other will go off and start a hedge fund. It’s a political year, and Obama couldn’t afford yet another black eye by having one of his cronies go off to jail in an orange jumpsuit. Besides, if Corzine stays out of jail, just think of all the money he could raise. You think he is the only one in the grey area of finance? If you can buy your way out of jail with money and influence, there is a huge untapped market for political donations.

Third is the idea that prosecutors looked at all the evidence and decided that the case was too tough to prosecute. Convicting someone means, “beyond a reasonable doubt” and they may have felt that Corzine could have created enough reasonable doubt in the jury room to walk. I am betting on the third version.

After speaking with CCC lawyer James Koutoulas, and other pro traders I have no doubt that money was stolen from customer segregated funds. There is just too much smoking gun evidence. Anyone with experience in the industry would be able to sift through the legal machinations and malarky to understand the deception involved. If this were adjudicated in an Arbitration or Probable Cause Committee at an exchange, I am relatively confident that Corzine would be found guilty based on the circumstantial facts that I know.

The New York Times has the tell about the whole charade,

Known as an obsessive trader who had the highest returns at the firm, Mr. Corzine frequently inhabited a desk on the trading floor. One visitor to MF Global recalled that during a tour of the firm’s Manhattan headquarters, his guide suggested that if he “stuck around” he might catch the chief executive trading a few million dollars in bonds.

But a $6.3 billion wager on the European sovereign debt proved fatal. The size of the bet was enough to wipe out the firm many times over, and as questions about Europe’s health grew, a run on MF Global ensued. In the panic, the firm tapped customer money to stay afloat, which scuttled a last-minute deal to save the firm. Mr. Corzine resigned just days after the firm filed for bankruptcy.

As a long time trader myself, I understand the mental state Corzine was in. I have had big winners, and some very big losers trading myself. Trading is psychologically and emotionally addicting. Once Corzine made the mental decision to enter his ill fated trade, he became stubborn. He added to his position. Hey, when in trouble double! Because of the type of trading he did, using cash, swaps, futures and other OTC instruments, it was probably very convoluted and difficult to follow the money. It’s not as if there is daily clearing and settlement in a lot of the products he engaged in.

I have seen traders take monstrous risks they couldn’t afford. The allure of making money is just to sweet. The hubris that comes with being right and predicting the future before anyone else is too intoxicating. Once you fall down that rat hole, there is no way out.

His trade, once entered wasn’t easy to unwind. It’s not like you can wake up in the morning and look at the market and just enter an order and get out. OTC doesn’t work that way. You have to call around and negotiate. A lot of times, the person on the opposite side of your trade has to unwind their trade for you to get out. That layering adds to the conundrum of unloading your position. Taking some time to unwind the trade can save you a lot of capital.

The complexity of the trade added to the complexity of the case and why the investigation has turned its sights on MF Treasurer Edith O’ Brien. I imagine she will become the fall person for the whole affair. Throughout this whole debacle, all the Feds had to do was give her immunity. But they didn’t. The reason, when you move money to fill a hole it’s a lot easier to explain than a convoluted trading strategy. Besides, Wall Street and government don’t have anything riding on Edith. They have a lot riding on Corzine.

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James Koutoulous says he will continue to do the government’s job for them.

Thanks for the link Doug Ross.

53 thoughts on “Corzine Will Not Be Prosecuted

  1. I know her attorney. He is one of the best and an extremely honorable person of high integrity. I do not know Edith.

  2. All those surprised that Corzine goes free, please stand on the head of a pin.

    What do you get when you combine two double standards?
    A. John Corzine
    B. Barney Frank
    C. Chris Dodd
    D. Eric Holder
    E. All of the above

  3. This is why so many people want nothing to do with the market. People with a fiduciary responsibility to protect your money screw the pooch and loose money that wasn’t even theirs to bet in the first place. The elected elite then don’t have the balls to prosecute and take evey penny Corzine has. Why the he$$ should the rest of us play by the rules? And thus civilization crumbles.

      1. You mean confirmed by the Senate right? Actually is that even true any more? Didn’t they just pass into law a change where the Senate no longer confirms many Presidential appointees?

  4. Crony capitalism at its worst. Can you imagine if instead of being a former Dem governor and senator and a bundler for Obama, Corzine had been a Republican? Then he’d be getting the Sheldon Adelson treatment. I can’t say I’m surprised, but I am disgusted.

  5. Corrupt Obama is
    absolutely refusing to allow even Corzine to be prosecuted. Obama says he is
    the defender of Medicare but steals over 700 billion from it and says he
    is for the people against the greedy wall street yet doesn’t prosecute a
    single one of them versus Clinton and Bush both going after thousands
    of them. Obama is the most two-faced man to ever walk the planet.

    Who really unchained Wall Street?

    1. Interesting read from American Thinker,thanks. No convictions by this administration makes me wonder if it all isn’t by design. No rule of law, exploding deficits/debts, attacks religious freedom,encourage expanding welfare roles,attack achievers….let the system collapse and then the great reset.

  6. Disgusting but no surprise. Why doesn’t Biden say Corzine will put y’all in chains. Oooops he’s a liberal wacho Democrat.

  7. The lack of prosecution for the wall street banksters is staggering. It undermines our financial system, rewards crooks and makes the rest of us want to stay away from investing. Without a healthy financial system and stock market , our ability to raise capital to grow the economy is severely hampered. All of that is bad for the long run.

    We must remove OweBlameA and his corrupt regime from office and restore order.

  8. and the libs mock the GOP? Folks here is a secret: MOST Wall Stret funds are run by liberal Democrats…its a myth that evil greedy Republicans run it…its evil greedy Hipp-Creep-Ocal Democrats who do so. Imagine if Corzine was a GOP croney of Bush and this happened? But heck, Corzine got off because to not do so would be to accuse those of us who know he borke the law of being racist for going after abeared wguite man in an effort to hurt the blakc duded in the WH. Libs, your days of being “pure” ended in the 60s and its gettign worse for you…thanks to Fox, Rush, Sean, and Mark….but hey, now Jon can bundle millions for the most corrupt President in US History…oh wait, the most corruput Affirmative Action President in history — think Im racist? hey folks yet again we lower the bar for his success and raise it for his failures…thats Affirmatve Action writ large. The weka losers have have some power and they detest those of us who are winners. We fight, they whine, we win, they spit, we work, the get high, we pay taxes, they demand more so they can do less…

  9. This is a case that I don’t understand. How can be in charge of a company that loses 1 billion dollars and say you don’t know what happened to the money and not have any responsibility to the stock holders of the company. Then, have the DOJ to say they aren’t going to prosecute. It really shows how our President, his supports, and our DOJ are corrupt and out of control. It seems like the President sees the Constitution as a hindrance and has no concept of the rule of law. In America today, it seems like good is evil and evil is good. They can rob, and steal, and murder(Fast and Furious), and there’s no justice. Are we coming to “end times” already?

  10. They don’t even bother to hide their malfesance and croynism anymore, and it’s n ot as though it is just democratic problem. Does anyone think that Romny will be any better at policing his croynies amongst the wall street elite. The Fed, the Sec, and Treasury is infested with wall streeters taking a break and padding their resumes for a triumphet return to the trading houses and hedge funds of Wall street. Certainly they throw the occasional Bernie Maddoff(he riped them of as well the general public, what a bastard) or Martha Stewart under the bus. But regardless of whose ass is occupying 1600 pennsylvania avenue or between Constitution and Independence the effect will be the same. Wall street is our government.
    The only solution is complete transparency at the Fed and Treasury. And put the FBI in charge of finiacial crimes with a firewall between investigators and Wall Street. A five year cooling off period between leaving the FBI’s finiacial crimes division and any work on Wall street and a 25 year sentence for any agent caught colluding or even communicating with invest firms except when engaged in an active investigation. Plus a 10% bounty to agents for any recovered monies.

    1. One caveat, Romney wasn’t Wall Street. He was a VC/PE guy. They have a love hate relationship with Wall Street. Corzine was a one time President of their club.

      1. A generation ago venture capitalist were the cool capitalist of finance, but they are pretty much tied up and walking hand and hand with the big wall street firms these days, and Bain Capital was one of the firms that led to the brave new world of Hedge fund consumer banks and Venture capitalist commercial banks combined with GSE mortgage lender insurance companies. And they have colluded with government agencies and branches to insure that true capitalism will never happen. We paid off AIG’s turd insurance so that Goverment Sachs could pay bonuses with money the Fed lended at 0% then boosted the big finance houses profit margin by borrowing the money they lent at 0% back at 2%. They Bailed out GM, which both the dems and the pubs have sold as a sop to the unions, but the real target of the bailout was GM’s finiance division which was larger and until the housing collapse, much more profitable than the car division. But niether side is quick to point out that. The pubs because it feeds into their narrative of unions out of control, and I got to admit Obama screwing the bond holders(mostly pension funds) in order to pay workers was pretty blatant payoff to the UAW. And the dims because it feeds their narrative of being for the little guy and nobody but the Government and Wall Street trust finance guys anymore.
        And Holder not going after anyone remotely close to top of the firms that commited fraud on the american consumer and very nearly brought down the world finiacial systems(I think it is still going to happen) just reinforces the fact that Bankers and Wallstreet is our true government regardless of who we elect.

  11. “Once you fall down that rat hole, there is no way out.”
    If there is no prosecution of Corzine, obviously there is a way out. Apparently you just get some of your fellow rats to give you a boost.

  12. I would suggest that, if Corzine isn’t to be prosecuted at all for this fraud, Obama had better grant him a pardon before President Romney takes over and we get a real justice department back.

  13. Think about the scenario. One of the customers gets all his assets stolen by Corzine, the courts then decide that those accounts really aren’t yours to begin with, because really in the age of Obama, you do not really own your own accounts, they belong to the collective. The poor wonk breaks and instead of throwing himself out the window, Corzine does the swan. If I am on the jury, I go home and sleep like a baby knowing I let a hero go free.

    When rule of law no longer exists, the rule of vengeance erupts.

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