Is Jon Corzine Going To Jail Now?
Is Jon Corzine going to jail? A recently-discovered e-mail claims he knew that customer money was being used to prop up his failing firm, MF Global. When Corzine testified before the Senate, he claimed he didn't know. If he lied to the Senate then, we can at least expect him to be prosecuted.
The Wall Street Journal revealed the recent discovery online late Friday. (Interesting how this came to light late on Friday, since stories that come out Friday night through Sunday don't get that much coverage in the media. People tend to "switch off" the news on weekends.) The story reveals that Corzine was directly involved in the decision to use customer funds to pay down an overdraft in MF Global's account.
Customer funds are supposed to be "segregated," that is, held apart, from the funds of the company. They are not supposed to be touched by anyone but customers. And, indeed, this has been the practice of Wall Street firms until the collapse of MF Global. The problem with Corzine and MF Global since its collapse is that, while everyone knows customer funds were stolen, no one has been held accountable. No one has been prosecuted. So now it looks like Corzine's got to face the music - or does it.
If you read through the report, you come across this curious statement:
Mr. Corzine... could argue however that because of the chaos of the firm's last few days, they didn't realize that the firm had run out of excess firm money in the customer account, according to people close to the case. In the past, Mr. Corzine has said he didn't know the firm had dipped into the customer portion of the funds until Sunday, Oct. 30.
Now it's time to apply some basic reasoning.
If the customer money was supposed to be segregated, that can only mean that it was somehow held apart from the company's money, right? If you knew you had to - under the law - segregate money, wouldn't you put that money into its own separate account? It's only logical. But this article is saying that MF Global money was somehow in the same account. Further, it's saying that Corzine could use that as an excuse that he didn't know that customer money was being used. He could claim he thought he was using MF Global money.
But the customer money should have been segregated. Get it? Segregated! What was MF Global money doing "commingled" with customer money. If I did that - just commingled customer money with my own - I'd be prosecuted. Never mind if I actually took the customer's money and used it for my own use.
You don't have to know anything about securities law to understand this. It's quite obvious, isn't it? Segregated means segregated. The money shouldn't have been mixed together. Period. That, in and of itself, is wrong. That could land me in jail if I did it. Yet here it's being seen as a possible "excuse" for Corzine.
What's the Journal article doing here? Is it proposing an "out" for Corzine? If not, then this is pretty sloppy reporting, isn't it? For example, if you check the Reuters report (click here) you don't read anything about any excuses for Corzine.
Back on January 10th, I thought that he wouldn't be prosecuted. When I first heard about this new discovery, I thought that maybe now Corzine would be held accountable, maybe even prosecuted. Now I'm not so sure.
The Wall Street Journal revealed the recent discovery online late Friday. (Interesting how this came to light late on Friday, since stories that come out Friday night through Sunday don't get that much coverage in the media. People tend to "switch off" the news on weekends.) The story reveals that Corzine was directly involved in the decision to use customer funds to pay down an overdraft in MF Global's account.
Customer funds are supposed to be "segregated," that is, held apart, from the funds of the company. They are not supposed to be touched by anyone but customers. And, indeed, this has been the practice of Wall Street firms until the collapse of MF Global. The problem with Corzine and MF Global since its collapse is that, while everyone knows customer funds were stolen, no one has been held accountable. No one has been prosecuted. So now it looks like Corzine's got to face the music - or does it.
If you read through the report, you come across this curious statement:
Mr. Corzine... could argue however that because of the chaos of the firm's last few days, they didn't realize that the firm had run out of excess firm money in the customer account, according to people close to the case. In the past, Mr. Corzine has said he didn't know the firm had dipped into the customer portion of the funds until Sunday, Oct. 30.
Now it's time to apply some basic reasoning.
If the customer money was supposed to be segregated, that can only mean that it was somehow held apart from the company's money, right? If you knew you had to - under the law - segregate money, wouldn't you put that money into its own separate account? It's only logical. But this article is saying that MF Global money was somehow in the same account. Further, it's saying that Corzine could use that as an excuse that he didn't know that customer money was being used. He could claim he thought he was using MF Global money.
But the customer money should have been segregated. Get it? Segregated! What was MF Global money doing "commingled" with customer money. If I did that - just commingled customer money with my own - I'd be prosecuted. Never mind if I actually took the customer's money and used it for my own use.
You don't have to know anything about securities law to understand this. It's quite obvious, isn't it? Segregated means segregated. The money shouldn't have been mixed together. Period. That, in and of itself, is wrong. That could land me in jail if I did it. Yet here it's being seen as a possible "excuse" for Corzine.
What's the Journal article doing here? Is it proposing an "out" for Corzine? If not, then this is pretty sloppy reporting, isn't it? For example, if you check the Reuters report (click here) you don't read anything about any excuses for Corzine.
Back on January 10th, I thought that he wouldn't be prosecuted. When I first heard about this new discovery, I thought that maybe now Corzine would be held accountable, maybe even prosecuted. Now I'm not so sure.
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