The old thread offered great insight. Of course, the actual CFTC rules, finally under some scrutiny now, turn out to have been even more full of holes. We are told that the rules allow the broker to do any and all of: - invest segregated funds and keep the profits - invest segregated funds in high-yield sovereign debt - temporarily borrow from client segregated funds for firm purposes so long as the firm provides security for the loans It seems to me that by far the easiest explanation for the MF Global missing funds is that MF Global was doing all of the above in an overly aggressive manner. For example, they may have been borrowing from segregated funds every day and paying it back at the end of the day. Also, using the firm's high-yield sovereign debt as security for temporary loans to the firm from segregated funds. When the firm went bankrupt suddenly, the loans were obviously not repaid. Of course, the regulators are going to claim this amounted to fraud, because that lets them off the hook. The firm's former managers are going to claim it was all proper within the vague CFTC rules. Vague rules of this nature are an invitation to looseness with client funds and the CFTC bears major responsibility for enabling that behavior.
They need to put Corzine in front of a jury. The jury wont care about the CFTC get out clauses. They will convict. Dennis Kozlowski got 20 years for much lesser crimes.
Yes. he speaks as if he knows but the reality is there is rarely any logic to what he says. Certainly none on the segregation issue.
I think he's toast. Nine times out of ten (maybe 99 out of 100) guys in his league ride it out and don't do the time. He picked the wrong time and the wrong issue to play fast and loose. Frankly, I'm shocked that a someone with his stature and experience would push a loosing hand over the edge to expose himself to serious criminal charges. Time will tell how involved he was in the details but it certainly does not look good now.