MF Global for Dummies (i.e., Congress)

“This may be the first time in modern history that customer funds sitting in a supposedly safe bank escrow accounts were stolen by a third party right under the noses of government regulators.

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MF Global for Dummies (i.e., Congress)

So, here goes, here is how you can explain the MF Global story to your elected dummies:

1. Suppose you conduct a financial transaction with a company that requires you to place funds into an escrow account at JP Morgan. The funds are supposed to remain in this escrow account as long as you remain in the financial transaction.

2. The company with which you conduct the financial transaction is allowed to collect interest on your escrow bank account, but is otherwise not allowed to transfer the funds to its own account.

3. However, the company moves your money into its own speculative endeavors and places a highly leveraged and complex bet on the bond debt of potentially bankrupt countries in southern Europe and elsewhere.

4. The bet made by the company goes bad. The company cannot meet the margin calls on its own trade and goes bankrupt. You are left to serve as the actual counterparty to the bet made by the company on its own behalf and to which you had no knowledge. As far as you knew, your money was still safe with JP Morgan.

Check out the post in full here…

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4closureFraud.org

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