Another county heard from. Joe Nocera, one of the best financial reporters in the country, echoes what we wrote just days ago — it looks like Jon Corzine, poster-boy for the Top 0.01%, may never see the inside of a courtroom, much less a jail.
And yet, he and his firm appear to have committed the "sin of sins" (or crime of crimes) for a firm of his type — he took segregated customer money to cover the firm's own losses.
Writing in the New York Times, Nocera says (my emphasis and some reparagraphing):
It’s sure starting to look as if Jon Corzine is going to get away with it.It's not just a crime; it's the mother of all broker-dealer crimes, and yet prosecutors are not going to prosecute unless they find a "smoking gun" — amazing. In how many courtrooms in this country is there no smoking gun, but plenty of evidence to convict?
By now, it has been well established that Corzine’s former firm, MF Global, committed the sin of sins for a broker-dealer. In late October, during the final, desperate days before it entered bankruptcy proceedings, its executives took money from segregated customer accounts — money that belonged not to MF Global but to the farmers and commodities traders that were its clients — and used it to prop up its rapidly collapsing business.
Nor was this petty cash: of the $6.9 billion in customer assets that MF Global held, a stunning $1.6 billion is missing. There is virtually no chance that the full amount will ever be recovered.
Let’s not mince words here. These executives committed a crime.
Virtually every knowing violation of the Commodities Exchange Act is a crime, but taking money from segregated customer accounts is at the top of the list. And for good reason. ... Indeed, customers need to be able to trust the fact that their money is segregated and protected at all times. Otherwise, the markets can’t function.
I guess it's the old old story: "Circumstantial evidence for thee; smoking guns for me and my friends." Nocera again:
Excuse me while I roll my eyes. Of course there isn’t a smoking gun. As a general rule, financial professionals tend not to write e-mails that say, “Hey, we’re desperate. Let’s break into the customer accounts!” And, of course, they are always going to say it was unintentional. ... [I]s it really plausible that you can take $1.6 billion — nearly 25 percent of the customer assets under management — and not know you’ve used customer money? It is not.Nocera then makes exactly the Rule of Law argument we've made in these pages again and again. If the connected rich can always skate, it's not just bad for financial markets (and it is really bad), "it isn’t good for democracy either."
I’ve heard it suggested, for instance, that the Justice Department won’t prosecute Corzine because it would hurt President Obama. (Corzine, the former governor of New Jersey, had been a big fund-raiser for the president.)He doesn't believe that suggestion, but he understands why others might differ.
Indeed. This is me, begging to differ.
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