Tuesday, October 02, 2012

Sentinal Ruling: You Have No Legal Right To Your Money.

Jon Corzine stole $1.6 billion from segregated client accounts during the collapse of MF Global, and now he has a legal precedent to officially support him thanks to the August 9th  Sentinel Management Group decision.

This egregious ruling not only sets precedence for futures brokerages, it sets precedence for every depository institution.   In other words, your funds--customer funds--are now the legal property of the mega-banks. That's right. The banksters can legally use your money to fund its casino transactions with legal impunity.  Not that it makes much difference in an environment where the rich and powerful are above the law.

But, for what its worth, this 7th circuit court decision--that puts Bank of New York Mellon ahead of former customers of Sentinel in the line of those seeking the return of money lost--punishes innocent account holders everywhere. Because, to be sure, the appeals court that affirmed an earlier district court ruling that the bank had a "secured position" on a $312 million loan it gave to Sentinel, which turned out to have been secured by customer money, did so in order that its ruling will be applied in perpetuity.

Basically, there is a new 7th Circuit opinion saying that there is no reason to impose a constructive trust on a lender's takings of customers' funds from client commodity firms that were used (inappropriately) to secure the firms' borrowings, as long as the lender can say that it did not know WITH CERTAINTY that customers' funds were being repledged. Negligence and misappropriation (vs. knowing criminal intent) are now a sufficient excuse for letting the lender keep the money and go to the head of the line for distributions in bankruptcies of the client commodity firms. Spread the word.” -- Walker Todd of AIER, former legal counsel, Federal Reserve Banks of New York and Cleveland
Links:

Sentinel indictments: Feds say 2 reaped $500 million in fraud
"Federal authorities announced Friday the indictment of Eric Bloom and Charles Mosley, the former chief executive and head trader, respectively, of bankrupt Sentinel Management Group Inc., on charges of defrauding some 70 customers of more than $500 million.
The case, described as one of the largest criminal financial fraud cases prosecuted in federal court in Chicago, stems from the sudden August 2007 collapse of Sentinel, a long-standing, well-connected money-management firm based in Northbrook that allegedly misled clients by exposing their accounts to a portfolio of highly risky derivatives.
$1.6 Billion in Missing MF Global Funds Traced

Email Ties Corzine to Missing Funds

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