MF Global Car Wreck Had One Driver
Another day, another scathing report condemning the actions of Wall Street’s former elite.
Earlier this week, the crosshairs focused on the cultural evils fostered by Barclays’ upper management. Now comes a report from the bankruptcy trustee of collapsed U.S. brokerage firm MF Global. This time the blame is shouldered by one man: former Chief Executive Jon Corzine.
Corzine was an active trader, according to the report, but received minimal oversight from the firm’s chief compliance officer. The internal regulator had no control over Corzine’s trading decisions – extremely risky bets on European sovereign bonds. The compliance officer only looked to prevent insider trading or market manipulation.
The former Goldman Sachs alum also executed large trades at the end of quarters, purportedly to make it appear that the firm was meeting its revenue goals. Corzine reportedly knew the firm’s safeguards were faulty but did little to amend them. He pushed back on implementing a Global Value at Risk (VaR) system, which would have given MF Global more visibility over its potential for losses, because he found it “unduly expensive.”
Maybe the firm should have just dipped into customer funds to pay for the VaR system. Oh wait – some of the funds were already being used to meet margin calls. Never mind.
Former Enron Chief Executive Jeffrey Skilling, serving a 24-year sentence for misleading investors, is in talks with prosecutors to shorten his prison term.
No More Middle Men (Bloomberg)
Direct bidding systems are mitigating the role of government bond traders at big banks, eating up profits and putting them at risk of losing their job.
A Rooting Interest (Bloomberg)
The two most likely candidates to assume the chairman’s seat on the highly-influential Senate Banking Committee are Senator Charles Schumer of New York and Sherrod Brown of Ohio. Wall Street is in trouble if Brown is the pick.
Jobless claims hit a four-month high last week, erasing a share of the gains in February. The sequester is taking its toll.
BofA All Tied Up (Financial News)
Of all U.S. bulge bracket banks, Goldman Sachs has the most flexible expense base, due mostly to the firm’s unwillingness to grant deferred cash bonuses. Bank of America, meanwhile, has the highest fixed compensation costs; it owes $4 billion in outstanding cash-settled restricted stock units.
Goldman Eyes Brazilian Growth (Reuters)
Goldman Sachs wants to triple the number of clients it covers in Brazil. The firm could add more than 50 bankers to make it happen.
Buzz Around the Office
As the Supreme Court weighs the fate of the Defense of Marriage Act, here’s an interesting factoid. Nine of the politicians who supported the measure have publicly acknowledged having an extramarital affair.
List of the Day: 401k
One of the underappreciated benefits of a good job is a quality 401k plan. When judging yours, ask these three questions.
1. Do you match?
2. Can I join immediately?
3. What’s the vesting policy?