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If the SEC Cannot Send Corzine to the Slammer, then "Securities Enforcement" Joins the Ranks of Phrases like "Military Intelligence"

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Seriously....
What he has done is a crime. The shareholders lost everything, the bond holders will probably lose, the employees lost, and the customers may or may not escape unscathed. This guy is testifying that he has, "Done nothing wrong", and in the strictest sense, perhaps he has not. But they sent Kozlowski to jail for 20 years, and Tyco is still up and running.

A risk manager is the equivalent of your mother, telling you to come in for dinner. They have a broad range of control, and their control of traders is central to the whole idea of "risk management". You can kick and scream and cry, but when they say, "cut", you have to close your position. When your boss is also the trader you are trying to control, and the one person in the firm who can over-ride you, then all the safeguards of risk management go right out the window. And it is probably pretty certain that Corzine did not show up and find that there was, "The CEO's Prop Book" all set up and ready to go. He implemented this himself.

It is ironic because at Goldman Sachs, the pressure to not lose money is intense, especially when it was a partnership. When Corzine was Managing Partner, if he had a bet on that was not working out, or looking shaky, you can be assured that all partners would be aware of it, and a number of them would give him a hard time about it. At MF, he was free of that built in risk management culture, and it shows. Like a college freshman who comes from a strict boarding school, Jon Corzine seems to have gone on one betting bender too many.

The public, Occupy Wall Street, and regualtors all have wanted a face to the highjacking of the US economy by investment banks. They now have it. Corzine has brought this up like room service to them, and it is very unlikely that he will escape some sort of punishment. 

 

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Guest Monday, 25 May 2020