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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Thursday, April 25, 2013

Former Goldman Sachs Guy, Jon Corzine, Sued

Jon Corzine stands for much that is wrong with the financial sytem:

--he cut his financial teeth at Goldman Sachs;
--he was Governor of New Jersey and a member of the Senate (i.e., served in the government);
--a year after he became CEO , MF Global declared bankruptcy because of Corzine's ineptitude as a financial manager.

Mirabile Dictu!  Someone (Bankruptcy Trustee Freeh) Finally Sues Jon Corzine Over MF Global
By Yves Smith - Naked Capitalism
The great unwashed public might get to enjoy a bit of theater. MF Global bankruptcy trustee Louis Freeh filed suit against Jon Corzine and two other MF Global executives, Brad Abelow and Henri Steenkamp, for running the firm into the ground for breach of fiduciary duty of care, breach of fiduciary duty of loyalty, and breach of fiduciary duty of oversight. That’s legalese for doing a recklessly bad job of being in charge.

The suit does not include the issue that has many members of the investing public outraged: the appropriation of customer funds. But even though the specific failings are familiar to anyone who has been following this sorry affair closely, reading them together is a reminder of just how astonishingly irresponsible Corzine was as an executive. One of the basic requirements of a trading operation is you need to have solid controls and reporting. Yet Corzine instead entered into a outsided trading strategy that produced accounting earnings but drained liquidity. It’s frustrating that the suit misses this element, that the trade actually had a two day funding gap on top its other defects, including the fatal one, the risk of increased haircuts on a levered trade. That meant it drained cash even when it was showing accounting profits.

Read the whole article and read the complaint here


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