The New York Times reports that after 10 months of stitching together evidence on the firm’s demise, criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear, according to people involved in the case.
The hurdles to building a criminal case were always high with MF Global, which filed for bankruptcy in October after a huge bet on European debt unnerved the market. But a lack of charges in the largest Wall Street blowup since 2008 is likely to fuel frustration with the government’s struggle to charge financial executives. Just a few individuals - none of them top Wall Street players - have been prosecuted for the risky acts that led to recent failures and billions of dollars in losses.
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No Criminal Case Is Likely in Loss at MF Global
In the meantime, Bloomberg reports that the trustee liquidating MF Global Inc. said he planned to work with customers in a lawsuit against Jon Corzine and other former brokerage executives, helping to prosecute claims and eventually distributing any money they recovered to claimants.
Trustee James Giddens has struck a 'cooperation agreement' with lawyers for the plaintiffs, whom he will help assert 'all possible claims and legal theories for recovery', he said. Working with them on a suit in progress in federal court in Manhattan, he won’t have to duplicate their efforts, he said in a statement.
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