The crash of Jon Corzine's firm MF Global revealed that the company had likely tried to save itself by taking customer funds that it wasn't allowed to touch, leaving $1.6 billion unaccounted for. Small farmers trading corn and wheat on the commodities market were among the victims, but they may not be entirely screwed, with investment banks lining up now to purchase their claims for as much as 91 percent of face value, according to DealBook. The firm's bankruptcy claims are also starting to look sweet to banks. Naturally, the men running the estate, who seem to be making do with a pretty dark situation, are also going to make out all right.
Investors are betting that "when the dust settles, the trustee, James W. Giddens, will recover nearly all the money owed to customers." And if customers do decide to sell their claims, they will not make any money off class-action lawsuits, but that could take a while anyway. The Times reports:
It is unclear how many customers will take the banks up on the offers, which are optional. Roughly 25,000 MF Global commodity customers have filed claims with Mr. Giddens, according to a recent court filing. Some who are significantly financially stressed because of MF Global’s collapse may leap at the offer of upfront cash. Others, however, may take their chances in the long and winding legal process, with the hope of a bigger payoff in the future.
“Ninety-one cents is pretty good,” said Don Laird, a retired investor in Texas who is still missing more than $100,000 after the MF Global bankruptcy. Mr. Laird said he could wait out the bankruptcy process, but noted that others might need the cash. “Who knows how long they might have to wait?”
Last week, the Wall Street Journal reported that the firm's COO, CFO, and general counsel, all of whom kept their jobs after the collapse to sort out the wreckage, might receive a few hundred thousand dollars each in bonus pay. "It's quite honestly saving a considerable amount of the estate's resources" to have them stick around rather than hire outside consultants, according to an adviser. Senator Jon Tester calls the request for bonuses "outrageous" because of the farmers who suffered. But it does seem like something is getting done over there.
On the other hand, what's probably not getting done is a criminal case. In the Times today, Joe Nocera writes, "Excuse me while I roll my eyes. Of course there isn't a smoking gun. As a general rule, financial professionals tend not to write e-mails that say, 'Hey, we're desperate. Let's break into the customer accounts!' And, of course, they are always going to say it was unintentional." But a failure to prosecute "would only deepen the cynicism so many people feel about government." The cynicism about finance, though, can't go much deeper.