Wednesday, February 29, 2012

Selective Enforcement Once More

Prosecutors are now quietly leaking that they don't see any criminal activity in the demise of MFGlobal. Recall that MFGlobal fraudently looted $ 1.6 billion from customer accounts that were, by law, supposed to be segregated from the firm's own assets. Now, it turns out, prosecutors are leaking that this all seems to be an innocent mistake.

Interesting, after Goldman Sachs has been blistered over and over again by the SEC and by state prosecutors for activities that no one had ever considered anything other than ordinary market-making. In the brave new Obama world, Attorney General Holder and his cronies in state law enforcement invented new criminal activities where there were none, in order to make political headlines at the expense of Goldman Sachs.

But now, when former Democratic Senator and Governor John Corzine is the one whose hands appear to have dipped into the cookie jar, this all is being washed up as simply an innocent mistake. Never mind that innocent customers, whose accounts have been looted, were not protected by the Obama-led CFTC, too busy on political witch-hunts to provide for the simplest of their regulatory responsibilities.

If customer accounts at broker-dealers that are, by law, supposed to be segregated from the broker-dealers' own funds, can be looted any time the firm is run by folks friendly to the President, then no one's funds are safe -- in broker-dealers or in mutual funds either. The blank check that is being issued to Obama's cronies to steal from the public is just one more example of the collapse of the rule of law.

But, this time, the real economy will suffer. Gradually investors will begin to sense that their assets, held in broker-dealers or in mutual funds, are not safe from looting by the people running those firms. So long as the leadership of these firms, like Corzine, worship at the Obama shrine, the investors will be unable to pursue criminal wrongdoing and their losses will be simply chalked up to "innocent mistakes."

No comments: