From the June 01, 2012 issue of Futures Magazine • Subscribe!

Call for independent counsel in MF Global probe

New batter?

After six months and several leaks regarding a low probability of any criminal indictments coming out of the MF Global investigation, Rep. Michael G. Grimm (R-N.Y.) and the Commodity Customer Coalition  (CCC) have called on Attorney General Eric Holder to appoint an independent counsel to take over the investigation.

Grimm was joined by other members of Congress and former MF Global customers outside the Capitol Building to call for an independent counsel officially on May 9. As of press time 21 members of Congress (all Republicans) had signed a letter to Holder asking for the appointment. 

The letter cited former MF Global Chairman and CEO Jon Corzine’s political connections. It stated, “Due to Mr. Corzine’s long tenure in both the financial services industry and as an elected official, he naturally developed many relationships with highly placed individuals in the government who are very close to the investigation of the MF Global collapse.”

The Department of Justice declined to comment on the letter. 

John Roe, co-founder of the CCC, says, “Given the continuing political influence of Jon Corzine, it is incumbent on Attorney General Holder to ensure that politics does not prevent justice from being done. The CCC believes that the current investigation has stalled. The key witnesses we have spoken to have yet to even begin the proffer process by which an immunity deal could be reached.” 

The letter goes on to cite Corzine’s relationship with Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler when they both were at Goldman Sachs more than a decade ago. Gensler recused himself from the MF Global investigation several days after it declared bankruptcy.

It notes that Corzine had lobbied the agency and had discussions with Gensler regarding Rule 1.25, which deals with the types of securities in which an FCM can invest customer money. The CFTC had a rule proposal out that would limit the instruments futures commission merchants could invest money in and MF Global was opposing the rule change, which eventually was approved after the collapse.

The letter also points out that Corzine recently was listed as a “first quarter volunteer fundraiser” for President Obama’s re-election campaign. The president had returned direct contributions from Corzine following the collapse but not money Corzine had raised as a bundler.

Throughout the process customers have complained about a perceived lack of urgency. “We have a case with $1.6 billion in stolen customer property in which three government agencies are investigating, there’s clear circumstantial evidence of fraud in the public domain and no one has been arrested months later,” Roe says. “We believe that an independent counsel would fast track not only the criminal investigation, but the fruition of the entire MF Global saga.”

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