19 June 2012

MF Global Customers "Get the Chance" To Auction Off Hopes For the Full Return of Stolen Funds

Great news for customers who had their money stolen by Wall Street!

No need to worry about its return, now they can sell their claims at a discount to -- Wall Street!

Perhaps we can get rid of the FDIC and cumbersome banking regulation and let people auction off their looted savings deposits and CD's when the Bankers lose their money by gambling on derivatives.

And as for education, well, children do have a lot of time and energy that might be better utilized in manual labor by privatizing schools in the model of privatized prisons, and dedicate them to learning through work.

Free market! Assymetry of information! Predatory finance! Innovation!

It's got something for everyone -- well, everyone that counts, that is.

This has to be considered with the other headline that was released about the same time by Gary Anderson at The Business InsiderDid Dimon and JP Morgan Steal MF Global Funds?  Chris Whalen Thinks So.
"If Whalen's opinion is true, no account at a broker/dealer is safe from the investment bank that determines to get money from a bankruptcy proceeding. There is a loophole that allows a margin call, even from companies that are bankrupt, and the bank can accept money that comes from protected accounts. They do not have to wait for the bankruptcy proceeding and then no one is left to protect the account holders! Wow, I say."
Of course we still do not know who did it yet, but there is no doubt that the money, and some precious metal and Treasury bond assets held on account, were stolen. And it is an old axiom 'that Caesar's wife must be above suspicion.' And in this case, she is at least caught outdoors in her nightie.

Perhaps it is just an overdeveloped sense of justice, but I find this to be particularly repugnant.   Wall Street is taking advantage of people's fears of not receiving their money back in the face of a blatant theft by some undisclosed financial parties, and of course an overwhelming show of legal force and slick maneuvering in the bankruptcy process by JPM.

Especially when those fears have been created by some of the very institutions that stand to further benefit from the lack of justice in how this is being handled by their bought and paid for regulators and politicians. Slobbering Senators Woo Dimon While They Gut Dodd-Frank- Bloomberg.

Financial Times
MF Global clients get chance to auction claims
By Tracy Alloway in New York
June 19, 2012

Former customers of MF Global will have the chance to auction off their claims, giving them another opportunity to recoup money from the failed broker-dealer.

SecondMarket, a trading platform for bankruptcy claims and other specialised investments, on Tuesday began an auction process for MF Global customers wishing to sell their recovery rights in the company once run by Jon Corzine, a former Goldman Sachs chief executive.

MF Global collapsed in October, leaving $1.6bn worth of missing customer funds and triggering a series of complicated and continued cross-border bankruptcy proceedings. Clients of the failed broker-dealer who are owed money can choose to sell their claims to the bankruptcy estate in an effort to recoup their funds earlier.

Such claim trading is common after big bankruptcies, such as Lehman Brothers’ 2008 collapse or Hostess Brands’ early 2012 filing.  (Note that NO Customer Accounts had to be auctioned off at less than par in these cases - Jesse)

Buyers – including hedge funds and some large investment banks – are essentially punting on the ultimate recovery values of the claims.

MF Global claims already trade on SecondMarket, but the new auction system is meant to make it easier for sellers to find buyers. Former MF Global customers will be able list their claims for sale on a centralised platform, and potential buyers will be able to conduct due diligence and then make their bids....

Read the rest here.