The MF Global Bankruptcy Filing: Did the Regulator Sell Out the Public for JP Morgan?
By Jesse - Jesse's Café Américain
What seems fairly obvious is that the law calls for MF Global to file a Chapter 7 bankruptcy in which customers are given seniority to creditors, rather than a Chapter 11 non-broker bankruptcy in which the customer interests are not upheld. The rationale for Chapter 11 has always seems to be contrived to favor a particular creditor bank.
Prior CFTC rulings and 'Rule 190' seems to have dealt with this in the past. Statements by various CFTC commissioners of late also seem to suggest that customers absolutely have a senior claim to any assets.
Why then did the SEC, with Gary Gensler's purported assent, seem to ignore the precedent and their own rules and cut a deal in a secret meeting to favor the Banks, specifically JP Morgan?
The personal involvement of Gary Gensler seems a little ambiguous based on the facts at hand, but it is obvious that the bankruptcy filing is being mishandled, and the SEC and CFTC are doing too little to represent the interests of the customers.
Obviously this should be more explicitly addressed and the customers need to be relieved of this travesty of justice.
President Obama may speak brave words in his speeches, but the actions of his Administration show that there is little teeth in their supposed championing of the public interest over the powerful interests of Wall Street. Actions speak louder than words.
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