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Forum Post: How George Soros Ended Up With MF Global’s Client Money /// KA-CHING! George Soros Is Up $130,000,000 On Those Crummy MF Global Bonds He Just Bought

Posted 10 years ago on Dec. 18, 2011, 5:55 p.m. EST by MonetizingDiscontent (1257)
This content is user submitted and not an official statement

KA-CHING! George Soros Is Up $130,000,000 On Those Crummy MF Global Bonds He Just Bought


-December 12, 2011-

George Soros' family fund bought $2 billion dollars worth of European bonds... http://www.businessinsider.com/george-soros-bought-2-billion-european-bonds-once-owned-by-mf-global-2011-12 ...at a discount from MF Global shortly after the brokerage filed for bankruptcy. This was reported by the Wall Street Journal's Greg Zuckerman and Dana Cimilluca.

Zuckerman and Cimilluca are now reporting the discount Soros got and the current size of his paper profits: http://online.wsj.com/article/SB10001424052970204336104577094702485491024.html

Still, the purchases highlight the hefty profits that could come from these bonds. Mr. Soros's family fund, Soros Fund Management LLC, currently is up more than $130 million based on the marked-down prices paid for the bonds, according to a trader who bought some of the same bonds, though it is hard to put an exact value on the complicated trade.

How George Soros Ended Up With MF Global’s Client Money


A warning to former MF Global segregated account holders: If the news has already been more than you can bear, please do not read this post — it may really push you over the edge

While the congressional hearings have been interesting, at times shocking, at other times even quite entertaining, Congress has yet to connect the dots. So I will do it for them.

In short, when the dots are connected, a significant portion of the $1.2 billion (some say more, some say less) of segregated account money illegally stolen by Jon Corzine’s MF Global (with the CFTC driving the get-away car) has landed in the pockets of George Soros.

Let’s go through this step-by-step:

(1.) Jon Corzine figured out a brilliant trade in the European debt market.

While I won’t go into the details, Corzine would have made a fortune if the trade could have been held to maturity of the debt instruments. The money was NOT lost because Corzine made a bad trade.

(2.) Corzine leveraged the trade to the hilt. He had the trade on with uber leverage. In fact, MF Global ended up with a $6.3 billion trade.
(3.) The Greek and Italian bonds tanked (rates went higher) over concern about a possible default.

The spike in rates would not have affected the final profitability of Corzine’s trade, but did put the trade on margin call after margin call. MF Global used every last penny of cash reserves to meet the margin calls, knowing that if it could survive the margin calls the trade would have made money at maturity. MF Global was unable to secure additional loans to meet the margin calls because it was leveraged to the max on the trade it .

(4.) MF Global illegally took segregated customer funds out of J.P. Morgan to meet margin calls in an attempt to survive the trade. It was the legislated responsibility of the U.S. government to protect this from happening.
(5.) MF Global’s clients (without their knowledge or permission and as an illegal manuever) became the default counterparty to MF Global’s trade. This is a fact Congress has not yet figured out.
(6.) MF Global puked about $1.5 billion of the trade, but it filed for bankruptcy when it was finally unable to meet further margin calls.

The remaining $4.8 billion trade was taken over by KPMG LLP, MF Global’s bankruptcy administrator in London. REMEMBER FROM POINT #5 ABOVE, MF GLOBAL’S SEGREGATED CLIENTS REMAINED A COUNTERPARTY TO THE TRADE BY DEFAULT.

(7.) KPMG peddled perhaps half (or more) of the trade to George Soros. The actual amount reported was $2 billion, but at a discount.

Remember, this trade was a guaranteed winner at the maturity of the bonds, so Soros was locked into a profit. Also, with his deep pockets ,Soros knew he could withstand interim margin calls if necessary.

(8.) MF Global’s segregated account holders became the default counterparty to Soros’ trade.

The profits that Soros has locked in represent, in large part, the segregated money previously belonging to MF Global clients that had been safe and secure (at least that is what the CFTC’s responsibility was) at J.P. Morgan.

Let me conclude by emphasizing that George Soros did nothing illegal in this manuever. The great speculator/shark simply smelled blood in the water and had the money to buy a distressed trade that was a guaranteed winner.

But in the process, the profits Soros will realize will in part (or in whole) be the segregated funds of MF Global’s clients. Technically, and legally, these funds belong to Soros because they were laundered through the complex process of rehypothication. But make no mistake about it, this is the money that previously belonged to MF Global’s clients.

So the dots are connected. MF Global’s clients (by default) became the counterparty to George Soros’ trade. MF Global’s client’ money, while illegally taken, legally became George Soros’ money.

And, Congress seemingly has no hint this money trail exists; the CFTC takes no responsibility for this ugly episode in history; and the Administration and the Fed would rather spend their time hearlding the $180 billion-plus money it gave to AIG.

(((Source))) Peterlbrandt: http://peterlbrandt.com/how-george-soros-ended-up-with-mf-globals-client-money/



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[-] 3 points by MonetizingDiscontent (1257) 10 years ago

::::::::::::::::::::::::::Soros Up $130 Million On MF Global Bonds::::::::::::::::::::::::::


-Dec 13, 2011-

:::::::::::::::::::::::Corzine and Soros Reviled for Different Reasons:::::::::::::::::::::::


-December 12, 2011-

Two of the most hated names in global finance are Jon Corzine and George Soros.

Scorn is heaped upon Corzine, a former U.S. senator, New Jersey governor and head of Goldman Sachs, because he drove his company, MF Global, into bankrupty.

Soros is despised not only for reaping a fortune by shorting the British pound in 1992, but for his politics.

:::::::::::::::::The tie that binds Corzine and Soros? They made the same Bet:::::::::::::::::

(((Check This Map Out))) http://www.muckety.com/BB94DF97A40DD62C3914F0E8F1306C55.map?autoGroup=7,7&big=true

::::::::::::::::::::::::::::::::::::Articles about George Soros::::::::::::::::::::::::::::::::::::


[-] 1 points by MonetizingDiscontent (1257) 10 years ago

Thanks, I'll give this a watch a lil later in the afternoon. Still haven't seen this one.

-Happy New Year shadz66-

[-] 1 points by silverspider10 (17) 10 years ago

Ha, George Soros finally obeys the law and people are already diving into his crotch, head first....he is a big time dirtbag.

[-] 1 points by demcapitalist (977) 10 years ago

CME lawsuit goes after Corzines personal funds ---wouldn't that be a game changer if a banker had his personal wealth taken away for bad decisions. You know personal responsibly like the %99 are encouraged to have.

"Jon Corzine is among former MF Global executives named in a lawsuit filed by former CME Group Vice Chairman Charles Carey and fellow CME director Joseph Niciforo, along with several other Chicago-area traders.

The lawsuit alleges that the failed company improperly handled accounts of those traders and Carey's and Niciforo's trading firm, which is independent of CME.

The lawsuit was filed Dec. 8 in U.S. District Court in Chicago.

Michael Moirano, a partner with Chicago law firm Nisen & Elliott, represents the plaintiffs. Moirano said he is working to get the lawsuit certified as a class action. If successful, the complaint would represent holders of the 38,000 commodity accounts maintained under MF Global at the time it went under.Carey, one of the best-known figures in the Chicago trading community, and his fellow plaintiffs are seeking to recover missing customer money on behalf of all MF Global clients, as well as additional damages, from Corzine and four other former MF Global executives. The lawsuit aims to hold the former New Jersey governor and his top lieutenants personally liable for missing cash and frozen trades after MF Global's collapse. MF Global itself isn't named in the lawsuit.

Andrew Levander, a lawyer retained by Corzine after MF Global's filing for bankruptcy protection, didn't immediately respond to a request for comment.

The downfall of MF Global has put the CME board members involved in the lawsuit in a similar position as the farmers, hedge fund managers and floor traders who traded futures contracts through MF Global and have seen business disrupted the past several weeks.

In addition to serving on CME's board, Carey and Niciforo are partners in Chicago-based trading firm Henning & Carey, which relied on MF Global to process futures trades at CME's clearinghouse. When MF Global fell into bankruptcy, customers couldn't manage their trades or get at the cash they held at MF Global.

"Our clients are the victims of Corzine's folly," Moirano said." http://www.chicagotribune.com/business/ct-biz-1216-mf-global-side-20111216,0,6944468.story

[-] 1 points by demcapitalist (977) 10 years ago

I always know it's a post by you before I look for your name. Good stuff as always MD ! It really is obscene that we as taxpayers end up funding these super high stakes poker games. look what I found. A petition on the white house website to bring back Glass Steagall https://wwws.whitehouse.gov/petitions#!/petition/re-establish-and-maintain-separation-between-investment-banks-and-commercial-banks/ywCMKDfn

[-] 1 points by MonetizingDiscontent (1257) 10 years ago

NICE! wow, that is really really heartening, do you suppose they will try to water it down. I hope if this is brought to the floor for a vote, it gets a straight up or down vote. No amendments!

If they want "other" provisions they should pursue them in a separate bill entirely.

Thanks for this, keep spreading the word! =)

[-] 1 points by demcapitalist (977) 10 years ago

If I ruled the world wall street would have to operate completely in the free market, with no loans from the fed or retail banks and no bailouts .Banks would be regulated in order to protect the deposits of the middle class from speculative losses. Banks would be allowed to buy CDS to hedge risks but not allowed to issue them. Only wall street investment banks with no bailouts or fed loans available would be allowed to issue CDS. It could be fun !!! you know how those guys love risk.

[-] 1 points by MonetizingDiscontent (1257) 10 years ago

::::::::::::George Soros Buys $2 Billion Of MF Global's Europe Bonds::::::::::::


-12/ 9/11-

Safe to say George Soros isn't scared off by a little risk.

The billionaire investor bought about $2 billion worth of European bonds formerly owned by now-bankrupt MF Global -- the same debt that pushed the firm to collapse, according to The Wall Street Journal. KPMG, MF Global's bankruptcy administrator in London, offered the firm's leftover European debt to a variety of big investors and most passed, but Soros decided to buy, getting the bonds at below market price....

(((Continue reading this article Here)))


[-] 0 points by blackbloc (-19) 10 years ago

soros did nothing wrong if it wasnt him it would have been someone else someone was buying that regardless it's not like they would ever get the money back under any circumstances, the cocksucker corzine should hang though..

[-] 1 points by demcapitalist (977) 10 years ago

You know the CME is suing Corzine for his personal funds to pay back the customer losses. I posted it further up on this thread somewhere

[-] 0 points by blackbloc (-19) 10 years ago

the should strip him and beat him in the public square

[-] 1 points by demcapitalist (977) 10 years ago

Don't forget the pepper spray

[-] 1 points by MonetizingDiscontent (1257) 10 years ago

noted. (and the article does reflect your sentiments)

Isn't that why they repealed Glass Steagal? That move legalized what banks are doing now. Under Glass Steagal, limit positions were imposed, and investment banks couldn't merge with commercial lending banks, which are FDIC insured, by taxpayers. These investment banks (who take an ownership position) always dump their losses onto the Commercial (lending banks) which get bailed out by us, when it comes to their losses.

Glass-Steagall forced commercial and investment banks to separate. Commercial banks were not allowed to underwrite the sales of stocks and bonds, while investment banks could not take in deposits from customers. It remained in place for half a century before it was repealed in 1999 through the Financial Services Modernisation Act.

This change enabled banks to become retail and investment operations and combine with insurance companies. Their law has been blamed by many commentators for the financial crisis that enveloped the globe barely a decade later.

Without the changes to the law, Citigroup – which the US taxpayer has been forced to bail out – would not have been allowed to exist after banking group Citibank and insurer Travellers announced their intention to merge. Until the 2008 financial crisis, Citi was able to claim to be one of the biggest financial institutions in the world as a result of the takeovers it was permitted to make as a result of the legislative changes – including a move into investment banking by buying brokers Smith Barney and parts of Schroders.

Legal, now... yes. But is there something wrong with it? I think so. Something systemically wrong. Its the policy that I give my attention to, not so much the personality, the face, or party affiliation.

Its not personal. Its just bad policy.