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FBN's Charlie Gasparino on MF Global's trustee report pointing to compliance and control failures.
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But -- MF global test your report out today shedding light on the firm's fly business model lot -- that light was already shed first on Fox Business.
Listen to what Charlie Gasparino told us about MF global with business back in November.
Here's what we do know fox does network has learned that MF global compliance systems.
We're not fully upgraded under Corzine that Corzine did change the business model.
He essentially began it in early 2011 when they started -- using balance sheet capital to make trades in -- market.
But at that point.
And even later until the day the company guide those compliant systems we're not.
Fully -- in -- implemented.
-- -- week after an F global imploded he's been breaking news on the story from the beginning and Charlie.
Here with us once again how damaging is this latest report by the end -- trustee -- at -- get to do is look at the trustees words we should have a full screen -- -- exactly what he said and I'll tell you there's a lot of us there's a lot of noise they about the trustee possibly suing Corzine suing.
Some of the other officers but the big thing -- as far as I'm concerned.
Is what the trustee said about compliance systems inside MF global.
Has pretty adjusting he said the.
MF global they -- upgrade to compliance they did nothing hope essentially management failed to edge -- Treasury Department technology infrastructure.
What does that mean Jon Corzine when he took over MF global -- believed that was early 2011 was really specific he said we're good we're we see.
Decrease in Dodd-Frank financial spokes of financial reform.
We are not a systemically important firm we can trade he went around traded and as they retreated -- -- -- What was once a very pretty simple business model commodities broker right to something like -- hedge fund you know something that couldn't get it get go under the radar screen.
Screen legally from Dodd-Frank.
-- making these big bets and guess what in doing so.
He never upgraded the technology -- infrastructure the compliance systems.
To protect that other side of the balance sheet which would which is a brokerage firm customer money and therein lies the problem was and I can't tell if there's criminal charges.
That'd be filed here everybody's looking at -- as we were first to report is O'Brien is something he's she's a former assistant -- in the middle of all the money transfers.
She did the Fed's right now the FBI -- looking at possibly given her immunity.
There are people I know inside the federal -- -- prosecutorial apparatus that want to give her immunity that decision I hear is gonna come down pretty soon.
But I will tell you this the fact that these -- systems were not put in place.
And you talk to lawyers which I have today Harvey Pitt among those former SEC chairman this gives Corzine.
And -- some his senior team massive legal particularly civil liabilities.
You go out you don't you change the business model.
And you don't change the compliant systems.
Man that's malfeasance.
And it's logical but is it written anywhere that you have to do that -- stressed -- well two things here.
You have yes it is written that you have to do stuff like that you I mean it's its sovereign like.
You have to change a compliant systems if you do X.
It is written that you have to have us in compliance is an operations.
Generally and I'm paraphrasing you know we'll look at what is of Britain.
That meets the meets the type of business model you have we should point out that yes Jon Corzine's a big loser here and this shows a degree of sort of.
At very least -- just not paid attention to what he needs to do.
That's why they -- -- Fuzzy back in go at Goldman Sachs not because of his beard because he was a guy that was kind of Fuzzy on the details and now we're really hurts but this also gets to the gets to regulators.
The CFTC in the -- -- we have calls into both of them.
Why didn't they check if he had those compliant systems one thing about Corzine does he didn't lie clearly -- not like about what he wanted to do.
He was gonna take risk is guy said -- at an annual reports they took it went on TV and said it they told everybody -- -- interviews.
Why didn't they go in there and see that these guys there were basically creating what what looks like hedge fund right thing that.
It was an outlandish bet but they went out there and -- -- short term sovereign debt of troubled European economies on the notion that those economies would be bailed out.
-- and we see what's going on Europe right now.
You know two year and and 22 year notes of Italy and Spain.
Maybe will be -- that we don't know.
But it's turmoil over there why didn't they when they knew he was doing that business while the people at the C immune to CFTC when -- going to say.
Okay how we make sure you got all this stuff segregated because listen.
This is a big story and in this sense.
When Rezko went out there with a customers totally protected.
And not really some wars some warrant when Lehman went out there -- the customers totally protected.
The regular customers -- Lehman's brokerage customers or.
Their prime brokerage customers to big hedge funds weren't they got their money kind of stated they lost -- -- -- was it was I think it was sent overseas where they couldn't get it.
This is an issue that does come up and where were the regulators in this -- tea.
To people at the CME in this and Gary Gensler at the CFTC Ian and Terry Duffy at the -- That's the regulator -- watcher as well see me -- front -- regulation.
CFTC is sort of second in command and -- -- we're -- second command they're just the second line usually have the exchanges.
Provide what's known as front line regulation.
-- the CFTC right behind them okay to to see obviously is it is a bigger organization has more more regulatory power.
But that's generally the way it goes where were those guys and you know listen we're asking for their expert explanation.
Maybe they're gonna come back and say and said they lied to us we checked it we thought it was okay and you know who knows what's gonna happen that's accept any -- Clinton and I'll tell -- This is there's a big story from that standpoint didn't extort.
