The latest news on the MF Global bankruptcy and fallout, published in the John Lothian Newsletter (subscribe here) the morning of December 9, 2011.

In the wake of the MF Global bankruptcy, John Lothian Newsletter has created a special section on JohnLothianNewsletter.com devoted to news, information and commentary. The section features archived news stories featured in the John Lothian Newsletter, analysis and breaking news. Check regularly for updates. See the MF Global news section here.

Corzine’s ‘Intent’ Was to Head Off Possible Claims, Lawyers Say
By Silla Brush and Joshua Gallu – Bloomberg
Dec. 9 (Bloomberg) — Throughout more than two hours of congressional testimony, Jon S. Corzine was careful to invoke the idea of intent when asked how his failed brokerage, MF Global Holdings Ltd., came to lose track of as much as $1.2 billion in its clients’ money.
http://jlne.ws/sHlTKh

CME’s Duffy: Stiffer Penalties Needed For Tapping Customer Funds
By Jacob Bunge Of DOW JONES NEWSWIRES
Tougher punishments should be meted out for futures firms that dip into their customers’ money, in order to defend against another mess like MF Global Holdings Ltd. (MFGLQ), according to the chairman of CME Group Inc. (CME). More frequent and deeper audits were not likely to provide enough deterrent against futures clearing firms illicitly transferring protected customer money into firm-held accounts, CME Executive Chairman Terry Duffy told a House of Representatives committee Thursday.
http://jlne.ws/sLDzxP 

CME’s Duffy says MFGI moved customer funds
Futures Magazine
CME Group Executive Chairman Terry Duffy provided startling testimony during Thursday’s daylong hearings on MF Global in front of the House Committee on Agriculture. Duffy stated, “At about 2 a.m. Monday (Oct.31) morning, MFG informed the CFTC and CME that customer money had been transferred out of segregation to firm accounts.”
http://jlne.ws/rNvoxW

Can federal watchdogs squeezed for funding prevent future MF Globals?
Washington Post
It’s not just Jon Corzine who is in the hot seat this morning at the House Agriculture Committee hearing on MF Global’s bankruptcy. First to testify was Jill Sommers of the Commodity Futures Trading Commission, the federal watchdog responsible for overseeing the industry. Rep. Frank Lucas, the GOP chair of the committee, grilled Sommers about whether the CFTC had failed to foresee the firm’s …
http://jlne.ws/udmyHv

Agency only model best for futures brokers – RJ Obrien
Reuters
WASHINGTON Dec 8 (Reuters) – U.S. brokers buying and selling futures on behalf of clients should adopt an “agency” only model and not trade on their own behalf using the same vehicles, the head of one of the oldest U.S. brokerages will tell a congressional hearing on Thursday.
http://jlne.ws/tODhu2

MarketWatch First Take: Not just Corzine who can’t find the money
Market Watch
The former CEO of MF Global concedes he has no clue where the missing client funds are, but everyone in this sorry mess is equally at sea.
http://jlne.ws/uCKIWW

MF Global’s Corzine: I did not intend to break rules
Reuters via Yahoo! News
WASHINGTON (Reuters) – A contrite Jon Corzine, in his first public defense of his leadership of now-bankrupt futures brokerage MF Global, told U.S. lawmakers he “never intended” to break rules and had no clue what happened to hundreds of millions of dollars in missing customer money. The former U.S. senator and Goldman Sachs chief executive freely answered lawmakers’ questions during a fairly …
http://jlne.ws/sCZtTg

Corzine: It Was Those Darned Robots
Wall Street Journal Blogs
In his testimony today Jon Corzine invoked a favorite bogeyman of lawmakers and investors, saying the rise of high-frequency trading firms put pressure on MF Global’s ability to turn a profit via commissions.
http://jlne.ws/vrGEAy

MF Global was Leveraged 30 Times Measly Capital
Robert Lenzner – Forbes
So, he let MF Global operate with leverage of 30 to 1– precisely the ratio of debt to equity that sank Lehman Brothers, Bear Stearns, and required a $1.5 Trillion money massage of all the other banks.
http://jlne.ws/ua7uXY

Bill Singer’s Comment on Round One of Corzine’s Congressional Testimony
Forbes
Veteran regulatory lawyer sees Corzine as the Captain of the Titanic — but where were Wall Street’s regulators
http://jlne.ws/szKRKm

The Eerie Parts Of Corzine’s Testimony
Forbes
Twice, he said it in slightly quavering tones; Jon Corzine insisted it was “not my intent” to use segregated customer accounts in the activities of MF Global or any other customer of the firm. But, he can’t know for certain that the taking of the segregated accounts might have taken place without his intent– but by mistake or by the confusion and chaos of those last tragic moments.
http://jlne.ws/sHE0kW

Corzine’s ‘clueless’ confession
New York Post
Jon Corzine says he has no idea of the whereabouts of up to $1.2 billion in customer money that disappeared amid the implosion of the firm that he ran, MF Global. His “Sgt. Schultz” defense yesterday before a congressional committee would be pretty funny – if it weren’t a…
http://jlne.ws/tjIN24

FINRA: MF Global was not candid with regulators
Reuters via Yahoo! News
WASHINGTON (Reuters) – MF Global was not fully candid with U.S. brokerage regulators in 2010 when the firm was asked about its exposure to European sovereign debt, a top regulator said on Thursday. Steve Luparello, vice chairman of the Financial Industry Regulatory Authority, said in prepared testimony before the House Agriculture Committee on Thursday that FINRA had reached out to MF Global …
http://jlne.ws/toLSFc

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