Comments on: Did accounting help sink Corzine’s MF Global? http://blogs.reuters.com/bethany-mclean/2011/11/01/did-accounting-help-sink-corzines-mf-global/ Fri, 30 May 2014 19:54:25 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: ck427 http://blogs.reuters.com/bethany-mclean/2011/11/01/did-accounting-help-sink-corzines-mf-global/#comment-105 Wed, 23 Nov 2011 19:15:07 +0000 http://blogs.reuters.com/bethany-mclean/?p=7#comment-105 FINRA has nothing to do with Dodd-Frank….it’s about a typical politician (Corzine) and overpaid blowhard (Corzine) using leverage to buy crap assets and not disclose it.

We don’t need regulations — we just need disclosure.

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By: dtschuck http://blogs.reuters.com/bethany-mclean/2011/11/01/did-accounting-help-sink-corzines-mf-global/#comment-61 Tue, 08 Nov 2011 20:19:59 +0000 http://blogs.reuters.com/bethany-mclean/?p=7#comment-61 Remember this type of manuveuring when the next time Walls Street says regulatory disclosure is burdensome, hurts profitability and is unnecessary.

But for FINRA, MF Global would still be in the business of deceiving investors and constructing an even taller house of cards.

Wall Street hates sunshine, but it is the only disinfectant. Even then, we have to have properly empowered, properly funded regulators, who are unafraid and are supported politically, to take on the profit mongers, who have billions at their disposal to fight regulations, lobby Congress and contribute to political campaigns.

Dodd-Franks and the Volker Rule are just appetizers for the full course dinner that is required.

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By: VonHell http://blogs.reuters.com/bethany-mclean/2011/11/01/did-accounting-help-sink-corzines-mf-global/#comment-60 Sun, 06 Nov 2011 09:18:35 +0000 http://blogs.reuters.com/bethany-mclean/?p=7#comment-60 Hehehe…I have to agree with MarketForce.
Bethany McLean is smart, writes well, and above all, is even more cute now than in the “The Smartest Guys in the Room” documentary…

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By: loyalsys http://blogs.reuters.com/bethany-mclean/2011/11/01/did-accounting-help-sink-corzines-mf-global/#comment-56 Fri, 04 Nov 2011 21:31:05 +0000 http://blogs.reuters.com/bethany-mclean/?p=7#comment-56 In addition to the bath taken by investors in MF Global, there are the losses by futures traders who were obliged to liquidate their holdings at market price on Monday.

Also, the customers accounts have a shortfall – presumably to be covered by insurance – which came about because CFTC (yielding to pressure from clearing houses) decided in 1997 it was okay to move money between segregated and non-segregated accounts to finance the companies’ risky deals.

It looks like some of the bigger customers will have access to their money sometime next week and the little guys will have to wait a little longer, but there is something unsettling about this whole business.

We need more effective regulation – not less.

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By: ejhickey http://blogs.reuters.com/bethany-mclean/2011/11/01/did-accounting-help-sink-corzines-mf-global/#comment-54 Thu, 03 Nov 2011 21:44:17 +0000 http://blogs.reuters.com/bethany-mclean/?p=7#comment-54 Not accounting that ruined MFG. It was the no-account CEO, Jon Corzine.

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By: pco225 http://blogs.reuters.com/bethany-mclean/2011/11/01/did-accounting-help-sink-corzines-mf-global/#comment-53 Thu, 03 Nov 2011 21:40:16 +0000 http://blogs.reuters.com/bethany-mclean/?p=7#comment-53 I’m pretty sure that the premise for this article is false. The assets and liabilities under repo accounting are accounted for as a sale and thus de-consolidated from the balance sheet. But, the company simultaneous records a forward resale/repurchase commitment — which is held at fair value and accounted for as a derivative on the balance sheet. McLean makes no mention of that, and does not seem to understand how this accounting really works.

Please see page 99 of the 3-31-11 MF 10-K (Note 3: Collateralized Financing Transactions):

“These [repo-to-maturity] transactions are accounted for as sales and purchases and accordingly the Company de-recognizes the related assets and liabilities from the consolidated balance sheets, recognizes a gain or loss on the sale/purchase of the collateral assets, and records a forward repurchase or forward resale commitment at fair value, in accordance with the accounting standard for transfers and servicing. For these specific repurchase transactions that are accounted for as sales and are de-recognized from the consolidated balance sheets, the Company maintains the exposure to the risk of default of the issuer of the underlying collateral assets, such as U.S. government securities or European sovereign debt, consisting of Italy, Spain, Belgium, Portugal and Ireland. The forward repurchase commitment represents the fair value of this exposure and is accounted for as a derivative.”

Unlike other high profile cases, the language in the 10-K is also very clear that MF retains economic ownership.

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By: Maxwells http://blogs.reuters.com/bethany-mclean/2011/11/01/did-accounting-help-sink-corzines-mf-global/#comment-44 Thu, 03 Nov 2011 01:21:18 +0000 http://blogs.reuters.com/bethany-mclean/?p=7#comment-44 Corzine was running Major Fraud Global just like Goldman, this time he didn’t get to parachute out before the sh!t hit the fan.

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By: 31morgan http://blogs.reuters.com/bethany-mclean/2011/11/01/did-accounting-help-sink-corzines-mf-global/#comment-41 Wed, 02 Nov 2011 22:19:37 +0000 http://blogs.reuters.com/bethany-mclean/?p=7#comment-41 In addition to Chairman, Senator, and Governor, soon he’ll be getting a new title—Defendant.

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By: Ernesto11 http://blogs.reuters.com/bethany-mclean/2011/11/01/did-accounting-help-sink-corzines-mf-global/#comment-39 Wed, 02 Nov 2011 21:49:08 +0000 http://blogs.reuters.com/bethany-mclean/?p=7#comment-39 Bethany…a correction:

You state that the trades may not have been all that risky because they were repoed-to-maturity (ie financed to maturity). This is simply false. The trades are very risky, as risky as the underlyings (the bonds themselves).

As the Euro 2012 notes were under increasing stress due to the evolving crisis, they would no longer serve as sufficient collateral for the loans (due to market prices as well as credit downgrades). Margin calls on the loans no doubt were increasing, and my guess is that is where some of the clients money went. Either directly or in buying more of the bonds and posting them as collateral.

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By: realeconomics http://blogs.reuters.com/bethany-mclean/2011/11/01/did-accounting-help-sink-corzines-mf-global/#comment-32 Wed, 02 Nov 2011 18:12:16 +0000 http://blogs.reuters.com/bethany-mclean/?p=7#comment-32 Just wanted to add kudos to Bethany McLean for the well written article. Clean, well laid out, and simple enough for almost anyone who is interested in the subject to understand it. Yet, it asks good questions, treats the reader as an intelligent person, and provides pertinent details that allows them to begin forming their own opinions and analysis. Seriously…very good stuff and thank you.

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