The hunt for MF Global's missing $600-million in customer money could begin at the doors of Chicago-based Harris Bank.SHANNON STAPLETON/REUTERS
If you haven't been paying much attention to the MF Global case since the firm went belly up, here's the important update: even though $1.6-billion (U.S.) of customer funds went missing, and it is widely presumed that management took the money to backstop the firm when it was sinking, investigators are having a very hard time proving this.
And if they can't prove it, without a doubt, management could walk.
As Joe Nocera of The New York Times points out today, it is very hard to track what was happening when the firm was going under because the scene was utter chaos. Money was flying out of funds as execs tried to plug holes, and management argues that they very easily could have taken the customer funds by accident.
Even so, Mr. Nocera argues that the case needs to be prosecuted, even if MF Global management walks free at the end of it. "A failure to prosecute anyone at MF Global would be, if anything, even worse," he argued. "It would mean that executives at a broker-dealer can indeed steal customer money and get away with it — so long as it was 'unintentional.'"
To understand why this is so important, you have to read a column Mr. Nocera wrote about a year ago. Executives stayed out of jail after the crisis, while people lower down the food chain got dinged for getting caught up in the mortgage mess. It's a very compelling read.
Tim Kiladze