MF Global Lawsuit Puts Pressure on JP Morgan: Bullish Signs for Silver As COMEX Re-hypothecation Exposed?
Mainstream pundits are doing what they can to cover for JP Morgan & Chase. Over recent weeks, in an attempt to make JP Morgan appear as the good guy in the MF Global theft, reports that the bank has returned client funds, which would be certain to contribute to the banks collateral problems, have circulated the web. But, would JP Morgan & Chase, a bank that has historically displayed a well-developed instinct for self-preservation, make things right with anything other than negligible amounts of money? Probably not. And, in light of this, the bank could be facing further legal action against it. This legal action could be bring to light the banks unconscionable position in the silver market as it comes to light the bank inherited gold and silver from MF Global after customer accounts were settled in cash and closed out at, basically, the market price of MF Global and JPMorgan’s choosing.
James Giddens, the trustee liquidating MF Global’s broker-dealer unit, has published a 275-285 page report in which he stated he might bring civil claims against former CEO Corzine and other top MF Global executives for negligence and breach of duties to customers.
Giddens also stated he was prepared to sue JPMorgan Chase, if he and the bank could not settle within 60 days claims that the bank played a role in the disappearance of customer funds.
The potential MF Global lawsuit presented by Giddens will presumably argue that Jon Corzine and other executives at the global investment house failed to make the company’s liquidity crunch known, thus helping foment the conditions that led to the company’s collapse.
Jon Corzine failed to address MF Global’s growing liquidity needs as he tried to build the commodities broker into a global investment powerhouse, helping create the conditions that led to its downfall, a trustee in MF’s bankruptcy said yesterday. This would be a breach of Corzine’s and other executives fiduciary duty.
Giddens estimates that $1.6 billion vanished from customer accounts as the company first improperly fused client funds with its own coffers and then filed for bankruptcy on October 31, 2011.
Much of the gold and silver held in accounts at the failed brokerage firm MF Global were pooled with cash, options, futures and commodities. From this pool, customers were paid only 72% of the value of their holdings.
Essentially, the MF Global collapse sparked a radical redistribution of wealth held at the firm with no recourse for the customer. It did not matter whether one held paper assets at the firm or warehouse receipts which represent claims on physical assets, such as gold and silver. Everything was to be settled in digital (read: cash).
The Commodity Customer Coalition, which represents approximately 8,000 investors – many of them hedge funds – which had exposure to MF Global, has “issued a declaration of war,” says James Koutoulas, lead attorney for the group, and Chief Executive Officer of Typhon Capital Management. Not only is the CCC concerned with misconduct at MF Global, but also any abetment by JP Morgan in the swindle.
JPMorgan Chase served as MF Global’s clearing bank. It was the agent for roughly $5.7 billion in securities lending transactions for MF Global. In MF Global’s final days, it was also the recipient of customer funds, according to the trustee’s report. Plausible reports of a COMEX default were also circulating at the time of the MF Global collapse. Let’s allow Jim Willie to jog our memory of data supposed to have gone down the memory hole by now, if the powers-that-be had it their way:
We had a COMEX system failure in November. COMEX was ready to default on gold and silver in November. Rather than honor delivery demands in gold and silver- JP Morgan simply stole the money in the accounts that were going to stand for delivery. They had their pockets picked while they were standing in line at the delivery window. Notices of delivery were replaced at stolen accounts!
Let’s recall this November 25, 2011 blog post by Silver Doctors:
Ok. Now back to the 613,738 ounce adjustment by The Morgue. This silver is the 613,738 ounces that was deposited into The Morgue’s eligible vaults last Friday, Nov 18th.
Where might this silver have come from?
This is not an ignorant client depositing his phyzz at The Morgue, because it was adjusted today into REGISTERED inventory-meaning its silver that is available for Blythe’s delivery needs.
We have been updating readers that 1,420,916 of registered silver is currently unavailable as it is nowhere to be found in the aftermath of the Corzine/ MF Global scandal.
So, in short, the pressure put on MF Global, arisen in part from bad bets on European debt, led to overwhelming requests for delivery of physical gold and silver, which could have led to a COMEX delivery default (it doesn’t take much for this). Indeed, according to Jim Willie, “COMEX was ready to default.” According to Jim:
“JPM increased the amount of silver in their registered vaults by precisely the amount that was suppose to be delivered…JPM effectively averted both a Comex default and a European Sovereign Debt implosion.”
The National Futures Association agrees with the CCC, and has written a letter addressed to Jamie Dimon, in which the NFA urges Dimon to approach this issue with urgency.
And so, a lawsuit against MF Global should be loudly cheered on by anybody who wants the truth to be known about the manipulation taking place in the silver market by JPMorgan – and allied banks and transnationals- so as to ensure that neither the public enter into the market in a considerable manner and thusly preserve wealth (less than 1% is currently in the silver market) or make a move to reinstate the metal as an alternative currency.
An investigation could lead to the discovery of stolen gold & silver now sitting with JP Morgan so as to cover their unfair and unconscionable short positions in the market. It might also lead to a discovery of silver re-hypothecation on the COMEX.
That would make for two lawsuits against JPMorgan in which their position in the silver market was put under the microscope. This would be bullish for silver prices as, not only will the metal get some attention in the mainstream, but already savvy investors will become more acquainted with the depth of the fraud at JPMorgan in the silver market, as well as the lack of physical supply of silver.
The Silver Liberation Army would not be misguided by pushing for an investigation and prosecution of MF Global and its top executives, in the hope that it leads to The Morgue.