MF Global: 'Select Parties' Received the Customer Funds in the Last Week of Business

Hail to the Real Chief

It sure is taking them a long time to spit this one out, isn't it?   We stole your money, we own the system, and there is nothing you can do about it, you pipsqueaks, so just STFU and take what we choose to give you. 

Given the timing and the likely parties involved, these transfers, even when they do not involve the theft of customer funds, with the withholding of third party cash transfers by the intermediaries, done among insiders in the last week of a bankruptcy, have the appearance of a fraudulent conveyance.

Given that quite a bit of this money was undoubtedly held by MF Global's bankers, who were almost certainly aware of and may have helped to precipitate the bankruptcy, we might even have a criminal conspiracy to defraud the customers and other creditors in addition to the civil actions appropriate in a fair and unbiased bankruptcy proceeding.

There is also some evidence that certain customers were privately warned by the bankers, or perhaps even parties in the company itself, a few weeks in advance, and were able to withdraw their funds from the company before it failed. Some right wing money men come to mind, among others.

This suggestion by the trustee that the MF Global personnel took the customer money unknowingly, ie. by mistake, would be hilarious if it was not being used to describe so malicious and unspeakable lapse in stewardship by the privileged, wealthy people in stealing the livelihoods from farmers and cattle ranchers among others.

What surprises me almost more than anything is that these jokers are willing to risk bringing down the financial system for a measly billion dollars, which is a fraction of what they take in personal bonuses in a good year. Is this some sort of perverse adherence to the Ferengi rules of acquistion? "Once you have their money, never give it back."

If this stands, then nothing, no assets, held by the Anglo-American financial system are safe. When the next crisis comes, they will take what they want, starting with foreign holdings, working their way up the power and influence pyramid from there. And you can talk to the back of their hand if you don't like it.

Reuters
MF Global shortfall worsened as bankruptcy neared
Mon Feb 6, 2012 2:18pm EST

Feb 6 (Reuters) - The trustee liquidating MF Global Holdings Ltd's broker-dealer unit said the shortfall in commodity customer accounts began five days before the company's bankruptcy and grew in the days leading up to the Chapter 11 filing.

James Giddens, the trustee for MF Global Inc, said in a statement that his investigation has revealed that MF Global personnel might not have known of the shortfall at the time.  (Anyone in the business must be rolling on the floor laughing at this one. Oops, sorry, we inadvertently took the customer money by mistake, a simple $1.2 billion error, and its too late to give it back to the right persons. But we're dreadfully sorry for our innocent mistake. - Jesse)

He said he has traced a majority of cash transactions, totaling more than $105 billion, made in the last week prior to MF Global's bankruptcy on Oct. 31, 2011. Giddens said he is working with third parties to seek more complete information about transfers to "select" parties prior to that bankruptcy.

Giddens also said it is unknown when he will be able to make more distributions to former customers.

Net Asset Value Premiums of Certain Precious Metal Funds - Sprott Places Gold Offering at Premium

Sprott Physical Gold Trust Announces Completion of Its Follow-on Offering of Trust Units
Feb 3, 2012

TORONTO, Feb. 3, 2012 /CNW/ - Sprott Physical Gold Trust (the "Trust") (NYSE: PHYS / TSX: PHY.U), a trust created to invest and hold substantially all of its assets in physical gold bullion and managed by Sprott Asset Management LP, today announced that it has completed its follow-on offering of 20,000,000 transferable, redeemable units of the Trust (the "Units") at US$15.19 per Unit for gross proceeds of US$303,800,000 (the "Offering").

The Trust will use the net proceeds of the Offering to acquire physical gold bullion in accordance with the Trust's objective and subject to the Trust's investment and operating restrictions described in the prospectus related to the Offering. The net proceeds of the Offering per Unit are greater than 100% of the most recently calculated net asset value per Unit of the Trust prior to, or upon determination of, pricing of the Offering, as required under the trust agreement governing the Trust.

At today's prices this offering will pull about 176,000 ounces of gold off the public market.

In the reverse of what we saw with silver, the big follow on offering for the Sprott Physical Gold Trust priced out at a premium to its NAV and its market price. I think that is not possible with silver because of the huge premium that the Silver trust often carries. The Gold Trust premium is normally in the 3-4% range.

Sprott placed the entire gold offering fairly quickly, having announced it last week.

John Williams: US Unemployment Hits 22.5% in Alternate Estimate

Perhaps this chart will help explain the divergence that Charles Biderman of Trimtabs sees between the official unemployment numbers and the income tax data he has been tracking.

The difference amongst the three measures revolves around the treatment of workers who desire a real full time job, but have to either settle for a part time position and other forms of under-employment that may technically qualify as a 'job' but not as a 'living,' or who have simply been removed from the government's official attention span.

"The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.

The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment."

Read the rest of John Williams' Shadowstats here.

My own estimation is that the recovery is flat-lining here and is vulnerable to a double dip which, if it does occur, will be blamed on some exterior factor such as slack European demand, problems in the emerging markets, or China. But it is still too soon to tell from the numbers.

In terms of historical perspective, the great reformer Obama is much more like Herbert Hoover or Nelson Rockefeller than a Franklin Roosevelt. He resembles a moderate Republican despite all the hysterical rhetoric from the far right.

The economy has not been reformed, and most of the problems that caused the collapse in the first place are still operating. As the corporate lobbyists were able to weaken financial reform in Dodd-Frank, so they continue to monopolize the conversation and policy discussions with their money.

I do not see genuine change happening until and unless the human misery increases enough to trigger a reaction, mass protests, or some other serious challenge to the status quo and the apathy of the fortunate. And I have quite a bit of confidence that the one percent will continue to obsessively power forward as the economy dries up until they achieve a pyrrhic victory. Winning.

This applies not only to the US but several other western countries, particularly the UK. It is also true for China which despite the gloss of their miracle economy in the western corporate media remains largely a narrow oligarchy sitting on top of a virtual slave labor camp, with a few showcase exceptions. And the western oligarchs love it. As Bill Gates said, 'This is my kind of capitalism.'