SP 500 and NDX Futures Daily Charts - Poltergeist, the Presidency

The political demonstrators of days gone by, when people actually cared about things,  assumed a posture of non-violence.

The leadership class of today has adopted a culture of general non-involvement in almost everything about what they have agreed, or even sworn, to do, except collecting enormous paychecks for not doing it, of course.

When anything goes wrong, none of the leaders knows anything, and no one in charge is involved. Money vaporizes, people disappear, decade long wars continue on, and things just happen by themselves.

A person elected on a reform platform of change immediately brings back the people who created the problem in the first place, and smothers most of the impulse for reform, cutting deals and giving it away to a renegade business class and their representatives. He accepts massive campaign contributions from those he was hired to bring to justice, prosecuting no one. 

And one of his top financial advisors and campaign fund raisers, considered a top candidates for Treasury Secretary, presides over an abuse of customer funds so repugnant and rarely done that even Wall Street recoils in horror.

And yet his opponent, the pre-selected alternative, is from that very same predatory class, with a penchant for forgetting almost everything he has ever said or done in the past whenever he chooses, even denying things that he has said just yesterday, where it is not possible to claim non-involvement due to a preoccupation or some random out of body experience.  His own people liken his record to a slate, which can be wiped clean at will.

And amongst his peers he is the one judged to be 'most reliable.'   Are the American people gone barking mad?

Its like a very bad sequel to the long national nightmare from which people thought they had just escaped.  We are bit players and extras in Poltergeist, the Presidency.  And no matter who is elected, they keep coming back.

MF Global's Edith O'Brien Comments on the Safeguards of Customer Segregated Accounts

This is from a transcript of the CFTC Roundtable Discussion of Individual Customer Collateral Protection on Oct. 22, 2010.

As you may recall, Edith O'Brien is the Assistant Treasurer of MF Global whom Jon Corzine identified in his own Congressional testimony as the key manager over fund transfers of monies, and who has been recently subpoenaed to appear before the House.

In talking down to the 'myopic' particpants, Edith O'Brien makes the point that there are interconnected layers of protections for customer accounts, making the misuse or misappropriation of customer assets highly unlikely.

This transcript is followed by brief excerpts of the Nov 2011 and Fed 2012 testimony of the CFTC to the Congress about MF Global.

Ms. Edith O'Brien: "That's okay. Thank you all for participating today.

I think that a number of individuals from this table don't have the benefit of the extensive experience of the FCM structure, and I've heard two hours of dialogue about seg customer movements between the clearinghouses and the exchanges, and as the conversations continued, it appears that this is an extraordinarily myopic view of the current safeguard structure that operates in America and has effectively worked, to the best of my knowledge, for years.

This safeguard structure in this financial framework is not just about customer seg money moving from FCMs to exchanges, it is based on layers of partners and components across banking institutions who are approved to be exchange settlement banks, exchanges approved participating FCMs. FCMs do credit reviews of clients.  It's layered. Everybody has a role, some of the roles cross over. There's segregation rules, there's segregation calculation. There's now capital rules. There's now capital calculations. There's rule of 15(c)(3) about what can be done of the firm while FCMs are holding them.

So, as we continue the conversation this afternoon, I want everyone to consider the fact that there's a greater framework at hand here, one that has actually worked extremely well. One of the comments that I've heard over the last couple of weeks is how do we prevent a Lehman from happening here? We did. Lehman happened in the U.K.; it did not happen in America.

So, I think that Bob does want to explore the risk components this afternoon, and I want everyone to consider the wider framework that does effectively work at this time, always looking at ways to enhance this to protect customer funds. There's no question about that. But an enhancement is different than the entire change to an infrastructure."

MR. WASSERMAN: I would just make one note in response.

Certainly, Lehman was an example of how well things worked in the future seg world, (in protecting customer funds in futures accounts) and I am very gratified, one might even say personally gratified at how that happened such that futures customers, I think, things worked well with barely a hiccup. But understand that Lehman was an issue outside of the customer account. This was not due to a fellow customer, this was due to a problem essentially on the prop level and at the parent level.

What we're dealing with here is what happens if there is a problem at the customer level, and while that has been happily very rare in the future space, and very happily so, and that's in large part due to the excellent work that's done by a lot of people over here both at the clearinghouse and at the firms, we're bringing in a new environment here on the OTC, where it would be, I feel, a little bit premature to assume just how well things are going to work.

Obviously, we hope that we are developing a system where things will work as
7 well, but there's some different risks that we're going to be confronting, and, so, there's some different issues out there. With that, I think it's important to talk about what the costs are on the risk level because this absolutely changes the risk environment..."

CFTC Roundtable Discussion: Individual Customer Collateral Protection, Oct 22, 2010, transcript.

The November 2011 testimony of the CFTC's Gary Gensler on the taking of customer money at MF Global.



Testimony of CFTC's Gary Gensler on February 29, 2012

Net Asset Value Premiums of Certain Precious Metals Trusts and Funds

The premiums are rather low by historical standards.

Did the SEC Facilitate the Fraud at MF Global?

I did not treat this particular issue of the MF Global scandal sufficiently when I first became aware of it thinking, perhaps foolishly, that additional facts and information from the financial press and the investigation would be forthcoming.

That does not appear to be the case. So here is the story that suggests that the SEC had been providing MF Global special treatment to mask its financial difficulties while it floated a large bond offering. They betrayed their sworn duty to make the information public, and to act to protect the average account holder by promoting transparency and the symmetrical disclosure of information to maintain the confidence in the system, and quite likely out of a deference to power and influence.

We have seen many examples of the Fed hiding information and stonewalling legitimate disclosure of key financial information to 'protect the system.' The problem is that this merely serves to allow powerful insiders to game the system, and guarantee the system's decline, while reform withers.

Professional investors, through their own sources and resources, became aware of the MF Global problems and began to flee the firm, leaving the small independent investors 'holding the bag' as it were. It is not likely that JPM was unaware of this.

We have seen other instances of this sort of thing, such as the SEC whistleblower who lost his position when attempting to act on strong evidence of insider trading by one of the TBTF titans.

The Street has had it in for Jon Corzine ever since he betrayed them and profited from the Fed enforced LTCM rescue when he was the head of Goldman Sachs. And MF Global appears to have been the payback.

A dirty business, but as I have said, it is not likely that justice will ever be done. Mr. Corzine may not even be banned from dealing again in the financial markets.

I just would like to see people made aware of this, so they might protect themselves from these rapacious sociopaths and their enablers. And of course, to see the monies stolen from the innocent account holders returned.

MF Global is one of the most outrageous scandals in recent financial history, involving one of the principal donors and fund raisers to the Democratic presidential incumbent.

And yet it receives no mention in the debates or from the Republican candidates, and very little mention in the press except for the repetition of spin and slogans and disinformation. Are they planning to use this as an 'October Surprise' or perhaps as a sophisticated form of Wall Street blackmail? Or is just the foolish groupthink that possesses insular groups of powerful insiders when the system that provides their status and extravagant privilege is threatened?

And at least from the outside looking in the 'investigation' has the appearance of a very professional damage control and public relations campaign with all the trappings.

The warning for investors from MF Global is that The Financial Markets Have Not Been Fixed, and therefore the money you have in the markets is not safe.

WAS CRITICAL DISCLOSURE OF MF GLOBAL DOCUMENTS DELAYED, PROVIDED SPECIAL TREATMENT AT SEC?
By ManagedFutures

Why was release of critical disclosure apparently delayed? Why were time stamps suspiciously altered?

Critical documents related to MF Global’s financial condition appear to have been delayed for release by the Securities and Exchange Commission (SEC) at an important time just before a MF Global floated a bond offering to professional investors.

While possibly a coincidence, approximately the same time the documents in question were finally made public, MF Global professional account holders were beginning to flee the company, leading to an eventual liquidity crisis and the firm’s bankruptcy.

The document in question is MF Global’s Annual Audited Report on Form X-17-A-5. What is critical about this report is that it contained information regarding of MF Global’s risky sovereign debt trades, including some subtle, yet important, details that were not available anywhere else. Had professional investors had this information weeks after the May 31, 2011 initial filing date, as is said to be typically the case with such documents, they may have avoided purchasing what ultimately became near worthless MF Global bonds...

To further highlight special treatment, Mr. English points out that the document was held by the SEC concurrent with negotiations that FINRA and the SEC were having with MF Global over foreign sovereign debt exposure, which has now been widely reported after the fact. “It appears as though someone at the SEC may have been holding the document while negotiating with Mr. Corzine over his sovereign debt exposure,” Mr. English speculated, noting that between the May Filing date and September release date FINRA and SEC negotiated with MF Global and finally demanded an increase of capitalization to support Corzin’s sovereign debt trade. He notes that the documents were de-indexed from the SEC database and then reposted–unusual activity given that a sampling of smaller brokerage firms found no instances of missing or amended audits. “Astute industry participants may have been watching for the Annual Audited report of the broker unit,” noted Mr. English. “That report did not surface until September at the earliest. This is clearly out of the norm with respect to how the SEC usually scans and publicly posts these reports...”

When the Annual Audit Report in question was finally released weeks later, knowledgeable professional investors were said to start fleeing the FCM. Contrary to initial reports, this was not a “run on the bank” because these were futures accounts under the auspices of the Commodity Futures Trading Commission (CFTC). This widely assumed investor protection is critical because then the liquidation falls under the auspice of the Commodities Exchange Act (CEA), which assumes a “segregated account priority above all else” legal protection in the case of a bankruptcy through a liquidation process.

Special Privilege Provided Mr. Corzine

The document tampering raises serious questions about the relationship between the SEC and Mr. Corzine, painting a picture of special treatment the firm may have received, according to industry consultant, Elaine Knuth.

“This is really an important story because it goes beyond the SEC messy handling of filings. A filing delay before the bond offering, and during ongoing meetings between the SEC and MF Global, points to coziness, resulting in regulatory failure,” noted Ms. Knuth, who also contributes to the blog at www.MFGFacts.com. “It shows regulators favoring and protecting Wall Street investment bank interests over investor protections...”

Read the rest here.