Friday, February 10, 2012

"Criminal probe trail going cold at MF Global"

Via a reader.
Serious analysis from Reuters:
When commodities brokerage MF Global imploded, the FBI and federal prosecutors were quick to launch an investigation to pursue what seemed obvious to outspoken regulators and lawmakers: laws were broken and crimes were committed.

More than three months later, it is far from clear that anyone will face criminal charges over the disappearance of more than $600 million in customer money as MF Global spiraled towards bankruptcy in the brokerage's final, frantic days in the last week of October.

So far, the MF Global investigation is not tracking the early progress of other high-profile financial scandals such as RefCo, where former Chairman Phil Bennett was arrested within days of the disclosure that the futures firm had been hiding losses for years.

Lawyers and people familiar with the MF Global investigation of the firm that was run by former Goldman Sachs head Jon Corzine say that even though the hunt is still on to find out whether or not officials at MF Global intended to pilfer customer money in a desperate bid to keep the brokerage from failing, the trail at this point is growing cold.

To date, scant evidence of criminal intent has emerged in company emails, no former or current employees have sought to cut a deal to provide testimony about potential wrongdoing and seasoned defense lawyers say they are not seeing the tell-tale signs of a hot criminal investigation.

A source familiar with the work of Louis Freeh, trustee for the MF Global holding company that filed for Chapter 11 bankruptcy protection, says investigators have yet to find evidence of fraud in the multi-faceted and complex investigation.

The source, who declined to be identified because Freeh's office is still conducting its inquiry, says there was plenty of "chaos" at MF Global in its waning days, but "no evidence of fraud." Freeh is a former Director of the Federal Bureau of Investigation.

Ellen Davis, a spokeswoman for the office of the Manhattan U.S. Attorney, declined to comment. Randall Samborn, a spokesman for the office of the U.S. Attorney in Chicago, also declined to comment.

Criminal and regulatory investigations can of course shift gears at any time if new information comes to light. But adding up the pieces at this stage of the inquiries, the odds look long of criminal charges ever stemming from the collapse of MF Global because of the lack of bad motives or an intent to steal or deceive, the legal standard for a criminal case.

One securities lawyer in New York who is not involved in the case said that for the past month or so it's been "radio silence" when it comes to the work of the FBI and prosecutors in Chicago and New York. Usually when an investigation heats up, so does the rumor mill, the lawyer said.

Also, people familiar with the situation said, some executives and employees who in the normal course of an investigation would have been interviewed by authorities at this stage have not been asked to provide their version of events....MORE
Alrighty, it is time for the injured to sue PricewaterhouseCoopers.