December 25th, 2011
Econintersect: Mark Melin is a recognized expert on futures trading and investing. He is the author of a 2010 book "High Performance Managed Futures" (Wiley). This week he outlined the issues in the case that would question the legality of the transfers made by MF Global following the firm's collapse and may contributed to inability to locate as much as $1.2 trillion of MF Global client funds. In an article that he authored at Zero Hedge Melin identified three potential legal issues that could produce civil and/or criminal actions against the firm and its executives. The case could extend beyond MF Global into JP Morgan (NYSE:JPM), according to Melin. Picture is of John Corzine, resigned CEO of MF Global.
Follow up:The three legal listed in Melin's Zero Hedge article are:
- JP Morgan was able to purchase MF Global bonds at a discount without any open bidding process.
- The assets were apparently sold without disclosure to or approval from the U.S. bankruptcy court or trustees.
- JP Morgan may have sought special favors from the Federal Reserve to receive priority treatment over investor segregated fund accounts.
Melin says that Commodity Customer Coalition founder James Koutoulas is requesting that MF Global bankruptcy Judge Martin Glenn investigate three potential legal issues that are said to have occurred in transferring of MF Global assets.
Melin wrote the following about Mr. Koutoulas:
Mr. Koutoulas reports that JP Morgan would not even discuss the issues. “I can see that you disagree with me,” said Mr. Koutoulas, whose organization represents over 7,000 MF Global clients, mostly professional investors. “They won’t even meet with me and talk with me.”
Mr. Koutoulas is currently working Pro Bono and many of the lawyers are working at a highly discounted rates and requested that industry participants donate to help . “I need professional litigators and bankruptcy attorneys backing me up,” said Northwestern Law School grad Koutoulas who also operates Typhon Capital Management, which is an NFA-registered Commodity Trading Advisor and Commodity Pool Operator. "We've had an outpouring of lawyers who want to help," Mr. Koutoulas said, sitting with a young Yale Law School grad as we spoke.
According to Melin, Koutoulas is calling for a futures industry boycott of JP Morgan.
Source: Zero Hedge