MF Global: Crime, Comedy and the Cover-Up

MF Global’s October 2011 bankruptcy was the eighth largest bankruptcy by assets in the United States. James Giddens, the bankruptcy trustee, issued a press release on February 6 stating that his investigation found that money from customer accounts that was supposed to be segregated was improperly used to fund MF Global’s daily activities. Improper transfers of customer money occurred regularly in amounts under $50 million before MF Global’s bankruptcy. MF Global wasn’t caught, because it put the money back before customers knew it was missing. More in the Huffington Post [...]

Allen Stanford Will Not Testify in Ponzi Trial

The defense has rested its case in the fraud trial of Texas financier Allen Stanford without calling him to testify in his own defense. That means the case in what prosecutors call one of the biggest financial frauds in U.S. history could go to the jury by Wednesday afternoon. The decision is a calculated gamble by defense attorneys, who had told jurors at the outset of the trial that Stanford would take the stand. See CNBC report [...]

SIPC Announces New Acting Chair of its Board of Directors

The Securities Investor Protection Corporation (SIPC), which maintains a special reserve fund mandated by Congress to protect the customers of insolvent brokerage firms, today announced the withdrawal of Chairman Orlan Johnson from its Board of Directors. He will be succeeded by Sharon Bowen, who previously served as vice chair of the SIPC board, who will serve as acting chair. Read MarketWatch report [...]

Dirt for investors to dig, if they can find it

Ongoing efforts by regulators to give the public more details about financial advisers’ backgrounds still haven’t solved a key problem — getting more investors to use that information. The Financial Industry Regulatory Authority recently took a step toward resolving that issue. In a notice on Tuesday, FINRA invited suggestions from the public on possible improvements to its free online disclosure system, known as BrokerCheck. Read Reuters report [...]

Mets owner expresses optimism about team’s outlook

Pending litigation related to the Bernie Madoff Ponzi scheme, a huge payroll drop and uncertainly about his team’s ability to secure free agents, New York Mets owner Fred Wilpon is still excited about the upcoming season. The Mets are just weeks shy of Opening Day, but Wilpon still finds optimism about the state of his franchise and the ability to be relevant in the near future. Wilpon said Monday in spite of the obvious handicaps management has in fielding a relevant team, he has full trust in the people around him to do it. Read Wall Street Journal report [...]

Former SEC counsel to give back share of Madoff profits

Former Securities and Exchange Commission general counsel David M. Becker, who indirectly benefited from Bernard Madoff’s epic Ponzi scheme, has agreed to give back his share of the proceeds, a lawyer for Becker said Monday. Becker and his two brothers, whose mother left behind an investment account with Madoff when she died in 2004, have agreed to pay $556,017 to settle a lawsuit by the trustee overseeing the Madoff bankruptcy. More in the Washington Post [...]

Battle lines forming between MF Global customers and hedge funds

The MF Global saga could soon become a legal battle between hedge funds and the futures brokerage’s shortchanged customers, with more than a billion dollars at stake. As the investigation into the collapse of the Jon Corzine-led brokerage moves into more of a regulatory whodunnit than a criminal case, the guessing game centers on who the two court-appointed trustees overseeing MF Global’s liquidation will sue to recoup money owed to customers of MF’s broker-dealer unit and creditors of its parent. More in the Wall Street Journal here. [...]

Whodunit at MF Global

Almost four months after the bankruptcy of futures giant MF Global, clients still haven’t been made whole and still haven’t been told what happened to $1.6 billion of their money. Nor has anyone been charged with civil or criminal offenses. But a Journal report casts new doubt on the Congressional testimony of former CEO Jon Corzine. Beyond doubt is that Mr. Corzine’s reckless gambles on European government bonds destroyed the company. The question is what role Mr. Corzine or others played in the potentially illegal use of client funds to try to save the firm. Read Wall Street Journal report [...]

Madoff victims blast report

Bernard Madoff victims are slamming a blue-ribbon committee’s report on how to “modernize” government-backed insurance for investors — saying the proposed changes will do virtually nothing to help consumers hit by future scams. “I would say that in important respects, this is a put-up job,” said Massachusetts School of Law dean Lawrence Velvel, who lost big bucks to Madoff’s $65 billion Ponzi scheme. The SIPC Modernization Task Force this week recommended 18 changes to the Securities Investor Protection Corp., a government-chartered insurance fund for investors. Read more in the Boston Herald [...]

How Hedge Funds Got Hooked in a Ponzi Scheme

Scott Rothstein was a special kind of Ponzi schemer. Unlike Bernie Madoff or Allen Stanford, who mostly hurt individual investors, the 49-year-old Rothstein sucked in a billion dollars from sophisticated investors—including New York hedge funds that employed the well-known detective firm Kroll and an onsite inspector at Rothstein’s Fort Lauderdale law firm, from which he sold discounted legal settlements with annualized returns as high as 437%. Sadly, the settlements didn’t exist. Read more in Barron’s [...]