Tuesday, December 6, 2011

MF Global And The Safety Of Brokerage Accounts

Anyone who thinks the MF Global situation can't happen to whatever custodian their financial advisor uses is brain-dead.  The integrity of our system is eroding.  As it further erodes there is going to be a serious flood of money into physical gold and silver - Dave in Denver
I'll try to make this my last post on MF for awhile.  It's really yesterday's news and, as I said back when the initial details were first released, this is substantially more fraudulent than is being reported.  It turns out that Jon Corzine kept doubling down on bad bets on European sovereign paper - largely Greece and Italy I would bet - despite the protests of the chief risk officer, who resigned in March over this:  LINK  At least a few people on Wall Street still have scruples. 

There's a more comprehensive story about this in the Wall Street Journal, but the WSJ will not the report the behind-the-scenes truth.  That truth is that Corzine illegally used customer funds to shore up big margin calls on MF's principal trading account.  Furthermore, because of Corzine's relationship with the CFTC Chairman, Gary Gensler - who reported directly to Corzine and was promoted by Corzine and likely let Corzine sleep with his wife (you get the idea of the nature of the relationship) when Corzine was CEO of Goldman - Corzine was able to halt the CFTC from passing regulations that would have made it more explicitly illegal for Corzine to even think about touching customer funds for the purposes of short-term firm use.

This relationship with Gensler - and the exertion of influence on Gensler - should be immediately investigated by Attorney General Eric Holder.  But it won't be.  I truly hope that some investors file big class-action lawsuits against Gensler and the CFTC.  I really would love to see what kind of documents, emails and phone records that would be unearthed in the due process of discovery and document production.  Gensler does not want that to happen, and neither does Obama after the Solyndra abortion and the mess Eric Holder is in with the Fast and Furious scandal.  Unfortunately Big Bank Wall Street will be exerting its influence to prevent the truth from coming out because that will expose some of the underbelly of fraud that is occurring on a daily basis.  Furthermore, IF the MF Global trustee claws back customer funds who got their money out of MF before MF filed, then the trustee should ALSO clawback the money JP Morgan received as collateral against MF's positions.  I suspect this won't happen either though.

This brings me to my quote above.  I have said in the past that Wall Street is a monkey-see/monkey-do type of place.  As such, if Corzine decided that it was okay to illegally "borrow" customer funds and use them to make high-risk bets in the markets, then it tells me that this is actually a common practice on Wall Street.  I know from direct experience as a junk bond trader that it is not difficult to work around compliance and risk management (we called them "the risk Nazis").  And if it was being done back in the 1990's, it's being done on a much larger-scale basis now.  I don't care about Dodd-Frank because it is nothing more than "window dressing" for the most part.

Having said this, I want to make it crystal clear that eventually we are going to see the MF Global event at much bigger firms.  In fact, in a way, that's what the 2008 near-collapse was all about.  The ONLY difference is that Henry Paulson (another Goldman guy), Tim Geithner (a Goldman brainless puppet) and a few others decided that those banks were too big to fail so Taxpayer funds would be used to cover up the fraud and massive defaults.   But just like Refco was a prelude to MF Global - and we never did get to see what the real story was behind the Refco default - this MF situation is a prelude to much bigger securities industry scandals.  And it will involve the massive expropriation of customer money and securities at big Wall Street firms.  If you don't think this can and will happen, you are either ignorant of the facts or interminably naive.

At some point a lot more people who are becoming informed and willing to look at the truth will start moving their paper assets from these criminal enterprises known as Too Big To Fail banks and brokerages and move that money into physical gold and silver that is safekept with a verifiable trustworthy custodian.  Right now is as good of time as any to get in ahead of the eventual mad scramble for real safety and security.


  1. Afternoon Dave

    BB's response to the 7.7 trillion assertion:


  2. Dave-

    Once again, thanks for posting this. Do not limit yourself on the MF story. It is becoming exceedingly important that people grab hold of these things like bulldogs and not let go. We have a society with quick forgetters. That thieving bitch Corzine must testify soon, under oath, and you can bet perjury is on the table.

    One other thing I'd like to say. What is happening in our society is widespread, systemic, and a complete epidemic. We have an epidemic of greed and wanting that is the driving force behind this ethically poor and often illegal conduct. It is a societal problem and not simply limited to the ding a lings who get caught. If we do not get back to doing what is ethically, morally, and spiritually correct- we are fucked. At this point in the cycle- that appears to be where we are at.

    Keep up the good work.

  3. (Dave)

    thanks for the feedback. i'll be posting on MF as meaningful information becomes available. i'm just fatigued from thinking about the fact that Corzine will probably get away w/out any jail time and Gensler will keep his post at the CFTC.

  4. They cannot hide from their karma tho!

  5. There is a fucking world-class interview transcripted on Financial Sense today with Ann Barnhardt, regarding Corzine and the MF Global collapse.

    It is consistent with the opinions of Dave on this blog, and is one of the best interviews I have read in ages. She teed it up and powdered it.

    I saved it to my permanent files.

  6. Karl Denniger has some interesting posts at Market Ticker today regarding the MF Global claw back issues with repsect to the bankruptcy reform act. I agree with your opinion, if the rule of law is not observed to protect investors rights, capital will flee, as it has done for thousands of century's. I am suprised at how patient the market has been thus far.

    market-ticker.org for reference
    P.S. not trying to spam or associated with that website, I just check it from time to time.

  7. Of course he will escape. He will have an unseen army of legal advice and helping hands. We have no rule of law. Ratchet your expectations back to zero and try to keep your sanity. It's a fucking circus.
    And just keep bringing the pain.

    You ever catch my brother's blog over at Silverthorn? http://soulskier.com/

  8. (Dave)

    Awesome blog - did he really ski down that strip of snow on Loveland Pass?

  9. If people really wanted change they'd vote RP...even if they knew it would hurt! Everyone else is tied to the corruption!

    Donald Trump has invited all the Republican presidential candidates to a debate. Ron Paul and Jon Huntsman promptly and properly turned down the offer.

    In contrast, Newt Gingrich, hoping for a Trump endorsement, made a pilgrimage to Donald.

    One must understand upfront this is not a gracious offer by Donald Trump to conduct a a fair debate. This is a self-serving promotion by Don Trump, for Don Trump, to put none other than Don Trump into the spotlight as kingmaker.


  10. UBS' Advice On What To Buy In Case Of Eurozone Breakup: "Precious Metals, Tinned Goods And Small Calibre Weapons"


  11. My Circle Jerk from the CME located at Wacker Drive, Chicago IL
    MF Global (CME) opinion piece on DSRO roles and responsibilities breaking; Warren Pollock (wepollock) My conversation with Mr. Bryan T. Durkin , 50 Chief Operating Officer and Managing Director of Products & Services of the CME Chicago Mercantile Exchange. He is paid $1.78M a year according to Yahoo. My conversation resulted in total avoidance of the CME's role as DSRO (Designated Self Regulatory Organisation). I will assure that none of my funds will be focused towards the CME in the future. Designated Self-Regulatory Organization (DSRO): Self-regulatory organizations (i.e., the commodity exchanges and registered futures associations) must enforce minimum financial and reporting requirements for their members, among other responsibilities outlined in the CFTC's regulations. When a futures commission merchant (FCM) is a member of more than one SRO, the SROs may decide among themselves which of them will assume primary responsibility for these regulatory duties and, upon approval of the plan by the Commission, be appointed the "designated self-regulatory organization" for that FCM.


    No country for honest men

  12. As much as Ron Paul is shut out so has it been with technology a long long while. All really goes together in one cycle of "LIES" - and so it is in finance and it does seem that finance is the devil itself.

    It has channeled creative energies inappropriately forever.

    So another request - similar to Ron Paul's recently on this blog.

    The call for disclosure in all manner of subjects....


    Please note that J P Morgan today is making the founder proud and is keeping its tradition of evil standing tall.

  13. BULLION DIRECT looks like it may be affected by MFG. Be careful, be smart, don't trust anyone with your phiz!!!!!

  14. Do you have a link on that Bullion Direct thing?