3) MF Global had many subsidiaries scattered throughout the world, but effectively operated as one company under one management. Were you surprised by the fact that in bankruptcy, MF Global was treated as two entities, with the Holding Company allowed to continue operating under Chapter 11, led by the very same executives who had blown up the company? Did your attorneys (either in-house or outside counsel) ever meet with MF Global executives and/or attorneys to discuss or plan the structuring of the bankruptcy?
As a result of the Chapter 11, you were able to continue trading with MF Global, and were involved in a sizable transaction involving European sovereign debt in early November; is that correct? According to Mr. Giddens’ report and news articles published by the Wall Street Journal, more than $14 billion in MF Global fixed income positions were liquidated by the London Clearing House at below-market prices, resulting in substantial profits for the buyers. JPMorgan bought some of those bonds, along with the George Soros Family Trust, is that correct? And JPMorgan is one of the owners of the London Clearing House, is that also correct? Did you use your influence at the LCH to increase margin requirements for MF Global?
At the time when those transactions took place, it was already an established fact that more than $1 billion was missing from customer segregated accounts, and you were certainly aware that customer money had been repo-ed to support those sovereign bond positions. So didn’t it seem probable to you that you were dealing in stolen property, sometimes referred to as “fencing” or money laundering? How much money did you make from those bond purchases?
In his report, Mr. Giddens stated that “because these transactions took place at the LCH, the Trustee has not had full transparency into these transactions or the amounts that might be owed to [MF Global customers]”. Given that JPMorgan is a co-owner of the LCH, perhaps you could ask them to provide some transparency on those transactions to Mr. Giddens. Don’t you agree, Mr. Dimon?
In another transaction that took place two weeks after JPMorgan was placed on the bankruptcy committee, you purchased MF Global’s ownership share in the London Metals Exchange (LME). That stake is now worth $103 million, a gain of more than 150% in seven months. Here again, JPMorgan is making a huge profit from dealings in the remaining assets of MF Global, while customers who had segregated custodial deposits in your bank await the return of their missing $1.6 billion. Does that seem right to you, Mr. Dimon? Don’t customers have priority under the law for recovery of their stolen money?
4) When did you first become aware that MF Global was at risk of going under, Mr. Dimon?
And which of the following choices best describes your reaction; was it:
A) As a custodial bank, we have a legal and fiduciary duty to our customers. How can we make sure that their deposits are protected?
or was it:
B) Holy Crap! Those guys owe us over a BILLION dollars. What can we do to make sure we get our money back?