Tuesday, March 13, 2012

What Do You Get If You Work for MF Global and Lose (As In Can’t Find) $1.5 Billion of Customer Money? You Get a Bonus

What You Should Get – Jail

Bankers and Wall Street Operatives are always amazed and astounded by the hostility they generate for their huge salaries and enormous bonuses.  They say they work hard, have huge expenses in order to meet the costs of living their exorbitant life style and so in their minds they justly deserve the compensation they receive.  They cannot understand how anyone can object?

Of course much of the objections are based on the fact that these individuals seem to make these huge salaries and receive these even larger bonuses when in fact their performance is a disaster.  Case in point is the broker/dealer firm MF Global, formerly headed by Goldman Sachs alumnus, former U. S. Senator and former New Jersey Governor Jon Corzine.  The company crashed and burned, and regulators and those appointed to clean up the mess have discovered that up to $1.6 billion dollars in customer accounts, money that should have been segregated from the firm’s trading accounts, has gone missing.

So it is a surprise only to those naïve enough that they don’t understand how Wall Street works that not only did a number of former senior executives with the company stay on, but that those same executives are now set to earn large bonuses.

                                              Associated Press
MF Global executives Bradley Abelow, center, 
and Henri Steenkamp, right, will receive bonuses
if the winding down of the firm achieves certain goals. 
With them, in Washington in December, 
is ex-CEO Jon Corzine.

Louis Freeh, the former Federal Bureau of Investigation director now in charge of unwinding what is left of the New York company, is expected to ask a bankruptcy-court judge as soon as this month to approve performance-related payouts for the chief operating officer, finance chief and general counsel at MF Global, these people said. All three executives kept their jobs after the company's Oct. 31 failure in order to help Mr. Freeh untangle the firm's assets and maximize payouts to creditors.

So let’s see, the Chief Operating Officer, the Chief Financial Officer and the Chief Legal Counsel kept their jobs and will get bonuses.  Other than Mr. Corzine is there anyone else who would have been more responsible for the collapse of the company and the potential huge losses that investors, lenders and customers will suffer?  Is there anyone else other than Mr. Corzine who should have lost their jobs?  And is there anyone else other than Mr. Corzine who should go to jail if it can be determined that the company illegally appropriated customer accounts?

But Wall Street doesn’t work that way, accountability is only for the little people.  If hourly workers or middle management don’t do the job correctly, out the door they go.  If they do stay on, no bonuses for them.

Mr. Freeh's plan is likely to be closely scrutinized by MF Global creditors, customers, regulators and a Justice Department representative monitoring the case. It isn't clear how long it will take the bankruptcy judge to rule on the plan.

"It's unfathomable to me as an employee," said Todd Thielmann, a former MF Global floor trader who was laid off after the company collapsed. He says the company owes him money, and he has filed a suit seeking it. "Everyone's getting paid except customers and employees," he said. MF Global trustees have said Mr. Thielmann's case has no merit.

MF Global had 2,870 employees when it filed for bankruptcy. About 300 workers are left, including roughly 80 at the company's brokerage unit.
Brokerage employees are collecting their salaries but no bonuses while they work with a different trustee to wind down operations and handle claims, according to a spokesman for that trustee.

If senior management drives the company into bankruptcy, they get bonuses.  And yes, the compensation of those three senior executives may be reduced

Mr. Steenkamp and Ms. Ferber still are paid an annual salary of $500,000 each, people familiar with the situation said

but hopefully the bonus payments will enable them to stay out of the homeless shelters and soup kitchens. 

1 comment:

  1. Dear DPE,

    "...but hopefully the bonus payments will enable them to stay out of the homeless shelters and soup kitchens. "

    Or, horror of horrors, public school for their children.

    Yrs, Elsie