WILL ANYONE AT MF GLOBAL GO TO JAIL FOR TAKING CUSTOMER FUNDS?
Imagine you are a banker and you remove funds from a depositor’s account and use them to pay the bank’s creditor card bill. Would that be illegal? Of course it would.
It’s theft. But when MF Global Holdings, Limited, a New York brokerage firm formerly run by Jon Corzine (the former governor of New Jersey), took $175 million out of customer accounts to pay corporate obligations, no one got in trouble.
MF Global collapsed during the financial crisis in 2008 and was forced to file bankruptcy. In the hectic days prior to its collapse, managers of the firm were struggling to meet corporate obligations. In order to do so, they removed $175 million from customer accounts. When they were not able to replace the funds, the firm filed bankruptcy. The bankruptcy trustee is investigating the chain of events that led to the withdrawal of these funds. However, both Mr. Corzine and his lieutenants have invoked the constitutional right against self-incrimination when answering questions. It now appears unlikely that criminal charges will ensue. This is still another illustration of the lawlessness of Wall Street financial firms and the inability or unwillingness of federal prosecutors to hold them accountable. If you worked at a bank and stole $175 million from customer accounts, what do you think would happen to you?