There was a JP Morgan connection with the MF Global collapse. Apparently, Corzine (MF Global's CEO) ordered the transfer of customer funds to JP Morgan during the crisis. It looks like JP Morgan may have used those funds to cover overdrafts in MF Global's accounts.
| Ms. Genova told the subcommittee in her prepared testimony that J.P. Morgan discovered on Oct. 28 overdrafts in foreign-exchange clearing accounts managed by MF Global's U.K. affiliates. Mr. Corzine and other officials at MF Global were notified about the overdrafts, she added. MF Global assured J.P. Morgan that the overdrafts would be covered, according to Ms. Genova's testimony. |
Recently we heard that the CFTC was charging Mark Fisher's firm (MBF Clearing) with improper use of customer funds. However, we find out that Fisher transferred customer funds to JP Morgan during the Lehman meltdown and according to Fisher, "JP Morgan assured him that the funds were in customer segregated accounts." That ended up not to be true.
| “During the financial crisis, we decided at MBF to move money out of money market funds — including the reserve fund, which broke the buck — and move it to the safest bank in the world, JPMorgan, in the safest instrument available, U.S. government bonds, and that’s where we kept all this customer money,” he said. |
Now we find out that JP Morgan is getting hit with a $20 million fine by the CFTC (slap on the wrist) for improperly using customer funds of Lehman Brothers.
| The CFTC charged that J.P. Morgan, between 2006 and 2008, counted customer Lehman customer funds as if they were Lehman funds, for the purpose of facilitating transactions on behalf of Lehman proprietary accounts. |
Looks like JP Morgan has a habit of using the customer funds of client firms to cover overdrafts. Clearly an illegal pattern here, but once again, JP Morgan (Jamie Dimon) gets away with it scott free. Meanwhile, the customers of those firms are out their money. It went to JP Morgan.
