Eh, no problem, just modern capitalism at work

david52_gwAugust 16, 2012

" Authorities are winding down their criminal investigation of the failed brokarage firm, MF Global, and despite the lack of oversight and the loss of more than $1 billion in customer funds, it now seems unlikely that anyone at the firm will face criminal charges.

The New York Times is reporting this morning that after ten months of investigation by federal prosecutors, sources say there isn't even enough evidence to charge any of the firm's executives in a criminal probe. The company may have failed spectacularly when it came to oversight and risk management, but the losses cannot be chalked up to outright fraud.

The company placed a grossly outsized bet (more than $6 billion worth) on the health of the European debt market last year and when it went south, the firm "borrowed" money from the accounts of its customers to try and salvage its own losses. Most of the blame for those trades fell on its CEO (and ex-New Jersey governor) Jon Corzine, and while his reputation and firm are ruined, it seems he will escape any legal sanction. He could still face massive civil lawsuits or fines from regulators who have a lower standard than a criminal prosecution, but jail isn't in the cards.

Of course, if the company's bankruptcy is the result of incompetence rather than theft that won't make those who were burned by it feel any better. Nor will it help ease the fears of anti-Wall Street types who already believe the financial industry is a wasteland of greed and corruption. Those waiting to see bankers and traders hauled away in handcuffs are going to have to keep waiting a little longer." end quote

Once again, instead of investing in productive enterprises, infrastructure, education, or any of the things that make a modern economy tick, the banking industry just gambles on paper. With all that preferential tax treatment for capital gains, dividends and carried interest.

And they walk.

Here is a link that might be useful: link with awesome picture of the perps before congress

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labrea_gw

And even when there is enough evidence they pay a fine & move on!

    Bookmark   August 16, 2012 at 10:07AM
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jodik_gw

It's easier to get busted and do actual time for marijuana possession, even in small personal use amounts, than it is to actually be prosecuted and convicted of any type of white collar crime, no matter how many people you have defrauded, or what the numbers actually amount to.

And since no one on the Hill seems interested in seeing any of their cronies behind bars actually paying for their crimes, it's a non-justice system that will never change. Prison is for the little people, I guess.

Joe is right... pay the fine, because it's cheaper in the long run, and don't worry about all those civil suits because they take years to settle, anyway... if they ever do.

    Bookmark   August 16, 2012 at 10:45AM
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esh_ga

The company may have failed spectacularly when it came to oversight and risk management, but the losses cannot be chalked up to outright fraud.

And that's why we need the consumer protection bureau. Because failure to adequately provide oversight to protect clients should be dealt with.

    Bookmark   August 16, 2012 at 10:48AM
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nancy_in_venice_ca Sunset 24 z10

The company may have failed spectacularly when it came to oversight and risk management, but the losses cannot be chalked up to outright fraud.

Well, that is so comforting to know.

    Bookmark   August 16, 2012 at 1:06PM
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labrea_gw

You need only look at Standard Charters fine $340 million no fault pay up. They only came up with that after NY Regulator threatened them with revoking their NY States license.
They still have to settle with the DOJ.

The fifth-biggest U.K. bank by assets was accused of illegally scheming over a decade to hide more than 60,000 financial transactions totaling $250 billion for Iranian clients.

They were originally only willing to admit to a possible $14 Million in illegal transactions with the DOJ but with this deal.

"The bank, which earlier had contested much of the allegations, acknowledged the fine covers all the transactions that the New York regulator alleged were illegal. The bank will acknowledge misconduct related to the $250 billion in transactions, although the final language is being worked out, according to people familiar with the matter."

Here is a link that might be useful: OOOPS move the decimal point

    Bookmark   August 16, 2012 at 1:18PM
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david52_gw

I'm beating my favorite dead horse, but I do think that one of the major 'wrong turns' this country took was when a major chunk of capital went from looking to invest in factories, mines, research, engineering innovation, infrastructure etc and went for derivatives, CDS, bundled mortgages and insurance on those bundles, speculating on currencies and bond rates; that whole casino that has sprung up. Spain, Greece, etc. are all bank bailouts because they invested in this sort of junk.

Whats important is that this economic activity is encouraged through tax rates and permissive laws, and that the industry is bribing congress hand over fist to keep it going.

When they fail, the tax payers bail them out. Because the whole economic system goes down with them. Thats just plain wrong, and some countries -eg Canada, UK, France, etc. are putting the crimps on this stuff. But not here. We like to call it "financial services" and encourage it.

    Bookmark   August 16, 2012 at 1:25PM
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labrea_gw

Eric Schneiderman NY Attorney General has also issued subpoenas for Barclay's & Royal Bank of Scotland for the libor rigging that happened during the 2008 meltdown!
Less regulation Huh?

    Bookmark   August 16, 2012 at 10:38PM
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