OWS Protests At Federal Hall in New York City

The Occupy Wall Street folks are back, but instead of focusing their efforts on and around Zuccotti Park, they're actually staking out space on the steps of Federal Hall. They're a minor diversion for the tourists and gawkers (of whom there are plenty), but they're really not getting much in the way of attention. The message hasn't really changed either. They're still railing against the income disparity between rich and poor, but most everyone passing by the area isn't giving the message much heed.

It's merely street theater to them:

The assembled interested folks taking photos and talking with protesters (5-10 at most).

Zuccotti Park, where a small group has a OWS table set up calling for a day of protest on May 1.

Railing against the 1%.

Looking down Wall Street towards Broad Street and Federal Hall; it's the typical security arrangement.

The steps of Federal Hall.

MF Global Clients May Never See $1.2 Billion Recovered

MF Global, the company that was headed up by prominent Democrat and former New Jersey Governor Jon Corzine, may never know what happened to the $1.2 billion in mission client money even though investigators thought they were making progress in unwinding the company's actions immediately prior to the bankruptcy:

Previously it looked as though regulators and probably the company's CEO Jon Corzine knew where that shortfall ended up without saying where they thought it went publicly. Some news outlets reported that, for example, roughly $200 million of the missing customer money went to JP Morgan. And today, The Journal's Scott Patterson and Aaron Lucchetti make the case for why that missing $1.2 billion is gone forever. One hypothesis floated again is that MF Global employees dipped into customer money to improperly use in other parts of the company. Another theory is that the company simply lost customers' funds on bad bets outside of the European bond market: "Investigators also are examining other scenarios that have gained traction in recent weeks, such as the possibility that MF Global suffered steep losses on investments made using customer money."

That's right; no one knows what happened to the money and they are characterizing the money as having been "vaporized". If the trustee in bankruptcy can't find the money, then the clients whose money was stolen will have to figure out the next steps. I can't imagine them not suing Corzine and other key figures in the company for fraud and breach of fiduciary responsibility in both their individual and corporate obligations.

Still, the money wasn't vaporized; it was misappropriated and stolen from client accounts. That's a criminal matter, and I concur with the view that a grand jury should be investigating filing charges against key individuals at MF Global, up to and including Corzine.

MF Global so completely ignored general accounting principles and the first rule of investments and brokerages - to keep corporate and client funds separate. Their malfeasance is overwhelming and Congress will once again hold hearings on the situation on February 2.

Corzine Continues Getting Grilled on Capitol Hill

Disgraced former New Jersey Governor Jon Corzine continues to avoid making the big gaffe that might land him in a perjury trap over testimony given on the MF Global debacle, but he's not out of the woods just yet.

Corzine thought he could turn MF Global in to a new and improved Goldman Sachs. He brought in the same kind of attitude and risk-taking that he brought at Sachs. But because MF Global didn't have the size and track record, once those risks (namely the sovereign debt in Europe) became monetized, the company didn't stand a chance and everyone wants to make sure they got their money covered. Forced to pony up additional collateral the company was left scrambling to find someone to buy them out, and it was in that process that the potential buyers found all kinds of discrepancies - most notably the fact that client funds were being used for corporate purposes.

That was the first of many red flags that sent the company into bankruptcy.

And it was Corzine who was pushing to get MF Global more heavily invested in the European sovereign debt, because he thought he could make a bunch more money there than on other less risky propositions. He and his board ignored and side stepped risk managers who pointed out the problems with the strategy.

Yet, CME Chairman Terrance Duffy contradicts Corzine's testimony:


Corzine denies knowing about the transfers of client funds, even as evidence is emerging to the contrary.

CME Group Inc. Executive Chairman Terrence Duffy told a Senate panel Tuesday that Corzine might have known about a transfer of $175 million from customer accounts earlier than that. CME Group operates exchanges on which MF Global traded. It also was responsible for auditing some of MF Global's books.

According to Duffy, an MF Global employee told a CME auditor that "Mr. Corzine was aware" of the transfer. Duffy said he referred the matter to the Justice Department and the Commodity Futures Trading Commission. Both are investigating MF Global's failure and the disappearance of the customer money.

If true, Duffy's accusation would raise the possibility that Corzine misled Congress about when he learned that client money was missing.

The transaction Duffy described wasn't necessarily illegal. Brokers such as MF Global are allowed to borrow from customer accounts temporarily in some circumstances -- to reduce their own risk, for example.

But such cases are a narrow exception. A firm couldn't use customer money to pay trading partners if its speculative trades lost value. Even in cases where borrowing clients' money was legal, the firm would have to replace it with a safe, cash-like investment such as a U.S. Treasury security.

If that can be confirmed, then Corzine's got bigger problems considering he's testified that he didn't know about any transfers and that may lead to obstruction of justice and perjury charges.

And to think that Corzine thought he might get tapped by President Obama to be Treasury Secretary. Obama's probably thanking his lucky stars he didn't make that move.

Corzine; MF Global Executives Testify Before Congress Again Today

It's another day of testimony before Congress for disgraced former New Jersey Governor Jon Corzine and several top MF Global executives. They'll again have to state that they have no idea where nearly $1.2 billion in customer money went. They'll claim that they aren't responsible for the accounting of the monies, despite being in a position to not only be responsible for the company policies, but are fiduciaries for their clients and made the decisions that sank MF Global in the first place.

Bradley Abelow, MF Global's president and chief operating officer, and Henri Steenkamp, the chief financial officer, are also scheduled to testify to the Senate Agriculture Committee.

All three say they don't know where the money is, according to prepared remarks and Corzine's previous testimony to a House panel last week. Nor do they take responsibility for authorizing the movement of money out of customer accounts.

Depending on the circumstances, transferring money from customers' accounts could violate securities laws and, in some cases, could amount to a crime. Federal authorities have begun criminal investigations. And regulators are looking into whether the firm broke securities rules.

MF Global collapsed into the eighth-largest bankruptcy in U.S. history on Oct. 31 after a disastrous bet on European debt. Corzine stepped down as CEO on Nov. 4.

Corzine told the House Agriculture Committee last week that he didn't know what happened to the money. He said he didn't become aware of the shortfall until Oct. 30, one day before the firm filed for bankruptcy protection.

In his prepared testimony, Steenkamp says he had no direct involvement in the transfer of funds.

"Direct involvement with operational matters such as bank accounts or fund transfers has never been part of my duties," Steenkamp says.

Abelow says he cannot explain what happened to the money without having access to MF Global documents, which a trustee now controls.

They'll try to distance themselves from the scandal, but that's frankly impossible to do. They are going to do their best to avoid falling into a perjury trap, so the amount of information that they can shed on the inner workings at MF Global in the runup to the collapse will be at a minimum.

Anything they say can and will be used against them in what is likely to be a series of criminal and civil suits, but so too is the fact that they simply claim ignorance, being outside the loop of those responsible for the transactions that led to the missing $1.2 billion.

Corzine, despite his attempts to fall on his sword, continues to claim that he isn't a responsible party in the missing money. Is it possible that some underling undertook the illegal actions that led to the missing money? Absolutely. However, it was a policy initiated by Corzine to expand trading on sovereign debt that pushed MF Global to the brink. Corzine took the risks, removed those involved in managing risks and were warning about the downside, and pushed ahead despite the sovereign debt risks increasing MF Global's exposure.

Former NJ Governor Jon Corzine Can't Explain Where MF Global Money Went

Nearly $1.2 billion in client money disappeared from MF Global accounts without a trace, and Jon Corzine doesn't have a clue where the money went. The former New Jersey governor and alleged wunderkind at Goldman Sachs who headed up the late MF Global can't explain where the money went.

Corzine, who was CEO at MF Global during the collapse, said he was “stunned” to learn that client accounts could not be reconciled as the firm went down.

“I simply do not know where the money is, or why the accounts have not been reconciled to date,” he said. “I do not know, for example, whether there were operational errors at MF global or elsewhere, or whether banks and counterparties have held onto funds that should rightfully have been returned to MF Global.”

Corzine said in his statement he would not invoke his Fifth Amendment rights.

“Considering the circumstances, many people in my situation would almost certainly invoke their constitituional right to remain silent — a fundamental right that exists for the purpose of protecting the innocent,” Corzine said.

“Nonetheless, as a former United States senator who recognizes the importance of congressional oversight, and recognizing my position as former chief executive officer in these terrible circumstances, I believe it’s appropriate to respond to your inquiries.”

Corzine noted, however, he had little contact with the company since his departure, and likely would not be able to explain much about what has happened during the liquidation of MF Global, which went under after Corzine directed what turned out to be disastrous investments in European debts.

Curiously, he hasn't invoked his 5th Amendment rights against self-incrimination. That may be a boldly stupid call on his part, considering that he's open to both criminal and civil actions in the bankruptcy of the financial firm as a result of his flawed strategies and calls. Corzine wouldn't have knowledge of the operations at MF Global as it wound down after his departure following the bankruptcy notification, but he should have knowledge of what happened in the weeks and months leading up to the bankruptcy and inability to determine where client money was.

That's a core responsibility of all financial firms. You are not allowed to commingle firm funds with those of the clients. Yet, that's apparently what happened, and the clients got screwed.

Corzine would love to rewrite history, and claims that he reduced MF Global's leverage from the time he took over to his departure. He then glosses over the key problem with the MF Global debacle, the pending sale in bankruptcy, and the failure to reconcile hundreds of millions of dollars of client accounts (the numbers have ranged from as low as $600 million to more than $1.2 billion.

Fact is that Corzine was claiming that the company was stable and in good financial position for a restructuring/sale in bankruptcy, when that wasn't the case. That should open him to civil and criminal liabilities.

Trustee Liquidating Failed MF Global Finds $1.2 Billion Shortfall

MF Global's problems have doubled. The trustee liquidating the company's assets has found that the shortfall is $1.2 billion, which is double the estimates that had been floating around for the past couple of weeks since the financial firm announced its bankruptcy.

The court-appointed trustee overseeing the liquidation of MF Global’s brokerage now estimates that the shortfall in the firm’s customer funds could be more than $1.2 billion, double previous estimates.

Regulators currently suspect that MF Global improperly used customer money for its own purposes in the days before filing for Chapter 11 protection, according to people briefed on the matter.

The decision to release the updated figure on Monday came after authorities concluded that much of the customer money had left the firm, these people said.

By MF Global’s estimates to regulators, roughly $600 million in customer money was missing. But as forensic accountants pored over MF Global’s books in recent weeks, they began to question those estimates.

By Sunday, the accountants from Deloitte and Ernst & Young had discovered an even larger gap in customer funds.

The trustee, James W. Giddens, held a four-hour conference call on Sunday evening with staffers in New York City and Chicago before deciding to publicly reveal the new number, according to a spokesman, Kent Jarrell. Officials from the Commodity Futures Trading Commission and the CME Group, MF Global’s primary exchange, were consulted on Sunday night.

Turns out that the initial estimates were far closer to the amounts actually missing; yet even the $950 million initially estimated fell several hundred million short of the tally.

This is yet another discrepancy that MF Global officials and Jon Corzine have to address. Where did all the client money go? Two possibilities: One is that company used the money to meet trading partners’ demands for extra cash, which could come back (but that would require seeing some kind of paper trail). The other is that it was used to cover trading losses, which would be unrecoverable. Both would appear to be actionable for sanctions, and the latter is criminal.

The company's books are a shambles, and it appears that there was no kind of accounting controls or oversight, despite regulators being on hand to view the books just days before the company imploded when the sale of the company prior to bankruptcy imploded.

More Details Emerge About MF Global Debacle

New details continue to emerge about the conditions that set in motion the collapse and bankruptcy of MF Global. It turns out that one of the items that led to the financial firm going bankrupt was a change in the rule done in December 2000 that allowed these kinds of firms to expand where they could invest their own money.

Before 2000, the rule permitted futures brokers to take money from their customers' accounts and invest it in a number of approved securities limited to "obligations of the United States and obligations fully guaranteed as to principal and interest by the United States [U.S. government securities], and general obligations of any State or of any political subdivision thereof [municipal securities.]" That is, relatively safe securities with high liquidity.

The banks, however, pushed the CFTC to expand the investment options that would allow firms to practice "internal repo." In this scheme, money is taken from customer accounts and invested short-term in a variety of securities, with the futures brokers reaping the not-insignificant financial rewards from their customers' money.

And, lo and behold, such efforts were successful. In December 2000, the CFTC agreed to amend Regulation 1.25 "to permit investments in general obligations issued by any enterprise sponsored by the United States, bank certificates of deposit, commercial paper, corporate notes, general obligations of a sovereign nation, and interests in money market mutual funds" — in other words, riskier investments that could make more money for Wall Street.

Then, in February 2004 and May 2005, Regulation 1.25 was further amended and refined to the liking of Ferber and the banks. In the end, the door was opened for firms such as MF Global to do internal repos of customers' deposits and invest the funds in the "general obligations of a sovereign nation."

This practice, of course, may well be the centerpiece of the MF Global disaster. We now know that Corzine — who was CEO of Goldman Sachs from 1994 to 1999 — bet $6.3 billion on the distressed long-term bonds of countries such as Italy and Spain, although it's unclear if clients' funds were used. Bart Chilton, a CFTC commissioner, told Bloomberg News on Nov. 10 that the loss to customers' accounts may have resulted from a "massive hide-and-seek ploy."

Time to turn back the clock on those regulations and reinstate them to the pre-2000 rule, which not only protected the customer accounts, but limited the bank/financial firm exposures to sovereign debt crises.

The push for ever greater profits from the banks blinded them to the downside and banks thought that the US government would backstop them (and for a chosen few, they were right). But that's the wrong tact for the banking/financial industry to take. There's plenty of money to be made without pushing into financial instruments that could potentially take down entire firms and destabilize the economy because of how entangled firms are with sovereign debt of foreign nations and unstable economic conditions. The pre-2000 rules made plenty of sense, and the reason they were changed was an attempt to maximize profit all while ignoring the downside risks.

Those downside risks are now being realized and it's time to reestablish the old rule.

OWS Protesters Hope To Thwart NYSE Operations With Day of Action

I work a couple of blocks north from Zuccotti Park and the OWS had promised to make a mess of the local streets through protests and marches all day.

So far?

Not much of anything to report in and around the 9am hour from this vantage point. There were some demonstrations at Zuccotti Park and the plaza across the street from Zuccotti Park but traffic was flowing smoothly on Broadway and there was a boosted police presence in the area.

There was apparently an attempt to march on Wall Street and the NYSE, but the NYPD has effectively sealed off that area to protesters (lots of barriers and people must show ID to get into the vicinity). Major hassles for those working in that area, and I'm not sure how the subway stops (Wall Street has several stops within walking distance) are being treated, but I guess there's a big police presence there too. Apparently the protesters are getting in line to show ID - and slowing down the process, but it looks like things haven't been shut down.

Stay tuned as things could get interesting.

UPDATE:
Dozens have been arrested for attempting to block access to the Wall Street area.

Hundreds of protesters from Zuccotti Park clashed with the police as they tried to reach the New York Stock Exchange on Thursday morning, and at least 50 were arrested.

Protesters had vowed to prevent traders from reaching the stock exchange on Wall Street, and some traders did appear to have a hard time reaching the building. But the stock exchange opened for trading as usual at 9:30 a.m.

Many members of the group pushed through lines formed by police, waving signs and banging drums as they moved. The police started taking protesters into custody who had sat down on the street about a block away from the exchange.

“Sidewalk!” an officer shouted, shoving a protester out of the road.

Another protester held a sign nearby: “Tear down this Wall Street.” The demonstrators and the large deployment of police officers snarled traffic on streets around the exchange.

Gothamist is also live blogging the situation.

What Next For the OWS Movement?

After another state court judge issued a ruling allowing Brookfield Properties the right to control their own park and allowed New York City to clear Zuccotti Park of protesters and their belongings, including tents, sleeping bags, and other paraphernalia, the park reopened under the new more stringent rules.

No one will be able to bring sleeping bags or tents into the park, and security barriers and checks of belongings were being carried out. Protesters did reenter the park, but only about 50 stayed on overnight. Those who may attempt to sleep on benches or the planters in the park would be removed from the park as violating the rules, which are posted at the barriers. It was quiet for the first time in weeks, and the entire park property was accessible once entering through the barriers.

What exactly did the occupation of parks and open space in New York City and elsewhere actually accomplish? Where will the OWS movement go from here?

That's the question being asked all over the place among the media and pundit types, but perhaps more importantly, among the people who were directly involved in the protest squatting in several cities across the United States.

I'd say that they definitely got quite a bit of exposure on the protests for the sake of protesting, and raised awareness about income inequality, but people already knew that. Considering that at most a few hundred people were directly involved in the Zuccotti Park protests on a regular basis, but whose numbers swelled when various marches were conducted outside the confines of the park, there was outsized media attention on the protests. Location had quite a bit to do with the attention. After all, had these protests occurred in someplace like Union Square or Washington Square, no one would bat an eye since this kind of protest is a near-daily occurrence. The tent city visual didn't exactly help spread the message, and conservatives would characterize the protesters as hippies or other left-wingers who were on the fringe.

Certainly, there were fringe leftists and hippies at these protests, but there were also clearly middle class people who wanted to see changes in federal laws and regulations to reduce the influence of banking and restoring laws such as Glass-Steagal, which allowed banks to enter into transactions that were in part behind the market meltdown in 2007-2008. It's the latter group that needs to get its voice heard - these are the folks with real ideas and possible policy changes that can form the basis for reform. That doesn't mean it will be successful, but it's far more likely to be successful than trying to occupy a few parks and open areas in cities.

The protests gained the most attention when there were confrontations with police; whether it was rioting in places like Portland, or arrests for assaults among protesters in New York; or when they disrupted traffic by shutting down the Brooklyn Bridge. In fact, protesters are contemplating another shutdown of the Brooklyn Bridge, and marching on the NYSE at Wall Street tomorrow. Those optics and tactics don't endear themselves to other New Yorkers, many of whom rely on the Wall Street businesses for their jobs. Protesting outside a bank headquarters may gain attention, but it wont change the bank policy, let alone the federal regulations and laws that govern bank conduct. Those changes have to come from Congress and that means getting candidates elected who want to push through reforms to the banking and regulatory system.

The thing is that if the NYPD didn't crack down on the protests, they would have likely slowly disappeared as the cold of winter saw all but the hardiest types go on to other things. It was the earlier police actions that galvanized groups to join in support with the OWS movement and energized the crowds to grow and stick around, even during and after the freak October nor'easter.

The NYPD action to clear the protesters from the park may likewise cause the protesters to change tactics and focus more on policy than on occupation, although that may only come after one last attempt to disrupt the NYSE and Wall Street tomorrow. The sooner that OWS can focus on the policy, the better for the group. The country needs ideas on how to improve the moribund economy and reduce the chances that another market meltdown can occur, to say nothing of the growing income disparities and problems with funding health care and education. These are complex issues that can't be solved by occupying Zuccotti Park, but can be by engaging in the political process.

BREAKING: Judge Backs City Ban on Occupy Wall Street

In what could be a crippling blow to the OWS crowd, Justice Michael Stallman, has ruled against the protesters.

Hours after baton-wielding cops cleared Occupy Wall Street protesters and their tents from Zuccotti Park on Tuesday, a judge backed the clean sweep.

The ruling by Manhattan Supreme Court Justice Michael Stallman says that city can stop protesters from bringing tents, tarps and other camping equipment into the park.

The decision is likely to be appealed, so it was unclear if the city would immediately reopen the park to people without tents.

Some Occupy Wall Street protesters had already moved to another public space, owned by Trinity Church, at Canal St. and Sixth Ave., where they used bolt cutters to open a fenced-in area.

Police swooped in and made numerous arrests. Daily News reporter Matt Lysiak was among several reporters covering the confrontation who were arrested.

Other demonstrators were massed around Zuccotti, where the overnight raid netted the arrest of 200 people, including Manhattan Councilman Ydanis Rodriguez

An interesting note, the case was originally commenced by Order to Show Cause. An Order to Show Cause, in over-simplified terms, is a way to bring a motion before the court on an expedited basis. This requires a Justice's signature to shorten the notice period and to grant any temporary restraining orders that are requested. For this, the OWS lawyers turned to a friendly face:

When the cops raided Zuccotti Park, lawyers for Occupy Wall Street woke up a judge with a civil liberties background and asked for help.

Manhattan Supreme Court Justice Lucy Billings signed an early-morning order temporarily barring cops from keeping protesters and tents out of Zuccotti Park.

But within hours, she was off the case as court administrators chose a new judge — and excluded Billings’ name from the list of candidates.

Billings’ biography notes that before she became a judge in 1997, she spent three years as a lawyer for the American Civil Liberties Union and also worked work community legal services.

“I have devoted my career to public service, especially the disadvantaged in desperate circumstances,” she wrote in a 2007 pre-election statement.

Lawyers for Occupy Wall Street phoned Billings after cops moved into Zuccotti Park early Tuesday, evicted the protesters and got rid of their tents and other camp equipment.

Asked why they called her first, protest lawyer Daniel Alterman wouldn’t say, remarking that he’s not a “gossip guy.”

The lawyers also called an emergency hotline set up to assign judges to after-hours cases. A staffer told them that since Billings had already been contacted, she should handle the Zuccotti matter.

The OWS lawyers tried to forum shop, but the system worked. Don't get me wrong, I have first hand knowledge that Justice Billings is a fine Justice. And, waking up a friendly judge for an order to show cause is a well known practice, especially in criminal law for search warrants. I am also very familiar with Justice Stallman, another fine Justice. Either way, I am sure the First Department will have -- or probably already has -- a set of papers seeking an appeal of the decision. I would not be surprised if the change of Justices is raised as one of the appeal grounds.

NYPD Clears Zuccotti Park of Protesters In Dead of Night

The New York Police Department moved in overnight and cleared out Zuccotti Park, home to the Occupy Wall Street protests since September 17.



At least 70 people were arrested for resisting NYPD officers who cleared Zuccotti Park near Wall Street and the World Trade Center site in New York City. The NYPD moved in on the park in the dead of night, taking protesters off-guard. Most of the protesters offered no resistance, but some refused to clear from the park, tying themselves to trees or each other.

The protesters, about 200 of whom have been staying in the park overnight, initially resisted with chants of “Whose park? Our park!”

The massive operation in and around Zuccotti Park was intended to empty the birthplace of a protest movement that has inspired hundreds of tent cities from coast to coast. On Monday in Oakland, Calif., hundreds of police officers raided the main encampment there, arresting 33 people. Protesters returned later in the day. But the Oakland police said no one would be allowed to sleep there anymore, and promised to clear a second camp nearby.

The police action was quickly challenged as lawyers for the protesters obtained a temporary restraining order barring the city and the park’s private landlord from evicting protesters or removing their belongings. It was not immediately clear how the city would respond. The judge, Justice Lucy Billings of State Supreme Court Judge in Manhattan, scheduled a hearing for later Tuesday.

Mayor Michael R. Bloomberg, who scheduled a news conference for Tuesday morning, had issued a statement explaining the reasoning behind the sweep. “The law that created Zuccotti Park required that it be open for the public to enjoy for passive recreation 24 hours a day,” the mayor said in the statement. “Every since the occupation began, that law has not been complied with” because the protesters had taken over the park, “making it unavailable to anyone else.”

“I have become increasingly concerned – as had the park’s owner, Brookfield Properties – that the occupation was coming to pose a health and fire safety hazard to the protestors and to the surrounding community,” Mr. Bloomberg said. He added that on Monday, Brookfield asked the city to assist in enforcing “the no sleeping and camping rules.

“But make no mistake,” the mayor said, “the final decision to act was mine.”Some of the displaced protesters regrouped a few blocks away at Foley Square, with the row of courthouses on Centre Street as a backdrop and police officers looking on. The protesters swapped stories of their confrontations with the police and talked about what to do next.

One protester at Foley Square, Nate Barchus, 23, said the eviction was likely to galvanize supporters, particularly because a series of gatherings had already been planned for Thursday, the protest’s two-month anniversary.

“This,” he said, referring to the early-morning sweep, “reminds everyone who was occupying exactly why they were occupying.”

At the park they had occupied since mid-September, workers using power washers blasted water over the stone that covers the ground. Soon the park caught the attention of people passing by on their way to work who had become accustomed to seeing the protesters’ tents and tarps.

The protests have accomplished little in the way of tangible progress although they have managed to highlight income inequality.

The park will be reopened to the public, but no one will be allowed to remain overnight.

Many of the protesters who left Zuccotti Park made their way to Foley Square, which is where state and federal courthouses are located. I doubt that they'll remain there for long and either take the show over to Union Square or Washington Square Parks. Some may try to make their way back to Zuccotti Park, but I don't expect to see another encampment there although a judge signed an order not only allowing the protesters to return to the park, but that they can take their tents with them.

Click to enlarge: Read the full court order

I think the judge is misreading the law and has taken an overly expansive view of free speech that infringes on the rights of the property owners (Brookfield Properties) whose rights are being trampled by not being able to maintain their own property because the protesters have squatted on them.

Businesses in the immediate area may breath a sigh of relief as the Zuccotti Park protesters have made a mess of sidewalks as barricades have limited access and some restaurants have lost significant business. Yet, the protests were largely confined to the park; it was when the protests marched off to other locations that mayhem (mostly arrests for disorderly conduct) ensued. In some respects, it would be easier to leave the protesters in place and deal with the security situation there rather than let the protesters disperse and find their way in to other locations, such as Wall Street itself.

Some protesters have vowed to shut down Wall Street Thursday, which sets up another potential confrontation with the NYPD. The clearing of Zuccotti Park may have been done in anticipation of those expected marches/protests at the NYSE on Thursday, but may not have the intended effect.

Still, it's interesting to note that for all of the press coverage of the OWS protests, we're talking about all of a couple hundred people at most engaging in protests at any one time in Zuccotti Park. From that perspective, the ability to garner press to the degree it has is quite remarkable even if the message has been more than muddled about what the protests sought to accomplish.

It's also important to note that there are distinctions between the OWS movement in Zuccotti Park and those in other cities or overseas, where there have been more violent confrontations than here in New York City. Part of that can be attributed to how Zuccotti Park's protesters have "organized" but part of that has to do with the nature of who has been attracted to the protests.

UPDATE:
The number arrested is now closer to 200.

Investigators Continue Searching For $600+ Million Missing From MF Global Accounts

Investigators have a tall task ahead of them in trying to piece together all the illegalities at Jon Corzine's MF Global financial firm. They're still trying to figure out where more than $600 million in money went, and the condition of the company's books is atrocious. It also isn't the first time that the firm was sanctioned for violations of various securities laws and rules:

On Friday, the bankruptcy trustee overseeing the liquidation announced that nearly all 1,066 of the company's employees were losing their jobs, although as many as 200 could stay to oversee the dissolution of the company. MF Global says the disarray in its financials is due to hasty unwinding of positions as its massive bets on European sovereign debt began to collapse, but it has a long history of regulatory violations pertaining to risk and records management.

Over roughly the past decade, MF Global was sanctioned half a dozen times and fined a total of $12 million, including a $10 million fine levied in 2009 for "significant supervision violations" that occurred during the five years prior, according to CFTC enforcement archives. One 2008 infraction alone cost $141 million in trading losses on wheat futures.

"They're going to have to figure out what did people know and when did they know it," Elson says. MF Global had undergone a routine audit only days before its bankruptcy filing and nothing was found to be amiss. "Why was this not caught, and if it had been caught, what would have been the consequences?" he says.

Clients might have to steel themselves for a long wait and the possibility of a loss of funds. Elson points out that sorting out the fallout from the collapse of Lehman Bros. was a protracted process and says this could follow a similar timeline. A worst-case scenario would be customers losing what were supposed to be safe investments and triggering a crisis of confidence that spreads to other trading firms.

That no one seems to know where the money went is a bad sign for everyone involved. Accounts are frozen and no one can really proceed until the money is accounted for. This isn't just about aggressively interpreting securities laws; it's about illegality within the company and a complete and utter disregard for one of the fundamental rules in the financial sector - never commingling client funds with those of the financial firm.

MF Global already admitted as much; but the condition of the books is so bad that it's going to take investigators time to figure out who knew what and when, and how much money is involved.

Corzine remains on the hook since it was his decision to push the firm into taking positions on European sovereign debt that pushed the company into insolvency and the firm lacked the credit to back its positions. Bradley Abelow, who was Corzine's Chief of Staff while Corzine was New Jersey governor, was the firm's COO and should have done a better job managing the company's risk. However, Abelow wasn't a key player in determining the firm's trading policy.

Thus far, all of the company's broker-dealers have been fired, but some may be hired back to help wind down the accounts.

As far as the firm's clients and creditors are concerned, there's a huge mess waiting to happen. Some creditors are claiming that JP Morgan Chase tried to cut to the head of the line; Chase is MF Global's largest creditor and proffered a $8 million emergency loan on the day of the bankruptcy. Expect lots of lawsuits as the creditors try to jockey for position to recover some value from the firm.

MF Global Fires Over 1,000 People As Liquidation of Corzine's Company Continues

MF Global, the financial company that Jon Corzine took over with the hope of turning it into another Goldman Sachs, has fired its entire workforce of 1,066 people.

A total of 1,066 employees of bankrupt broker and dealer MF Global Inc. have been fired, according to a statement issued Friday by James Giddens, the court-appointed trustee for the liquidation of the company.
Marketwatch reports that between 150 and 200 former employees are being hired to assist in the wind down of the business and processing of bankruptcy claims, according to Giddens.
MF Global is not conducting business, and will not be reorganized. About 17,000 customer account positions and approximately $1.5 billion in customer account funds have been transferred to other future commodities merchants, Marketwatch reports.

The company was laid low by decisions made by Corzine and the inability to account for hundreds of millions of dollars of its clients money.

Investigations continue into Corzine's actions, as well as those of the company and how the money was not properly accounted for.

Trustees for the bankrupt firm are in the process of liquidating what few assets that they have; this includes the office space and closing out company positions.

ames Giddens, the trustee, aims to vacate MF Global's midtown Manhattan offices as soon as possible and rent out smaller, less expensive office space to handle the liquidation, according to the statement Friday. MF Global's Chicago offices will continue to be leased for a limited time period.

Some employees of MF Global in New York and Chicago already had been let go last Friday. Salaries for those dismissed in the trustee's action Friday will be paid through Nov. 15.

The 1,066 released Friday represent a little more than one-third of the 2,847 staff listed by MF Global as of March 31. The broker-dealer unit isn't being restructured and the termination of employees is a "necessary part" of the liquidation, according to the trustee's statement.

"We are saddened by the trustee's actions today to terminate to many of our colleagues," a spokeswoman for MF Global said in a statement.

The mood in MF Global's New York office was described as grim, as human-resources staffers went from floor to floor to speak to employees. Some complained of suddenness of the announcement, with numerous people learning of the terminations via newswires or television.

Photos From Zuccotti Park

Here's a series of photos taken during the lunch hour from in and around Zuccotti Park.

While much attention has been put on the drum circle and the incessant racket from the drumming, I've found that you can barely hear the drums above the din coming from the adjacent construction sites at 4WTC and 3WTC. In fact, if you go one block north on Church Street, you can't hear anything other than the sound of motors and pumps for the construction projects. You'd have to wait for a lull in the construction noises to hear the drumming at least during the daytime hours.

One protester has sought to bring about student loan bankruptcy reform - trying to get student loans held to the same standard as other loans for discharge through bankruptcy.

Construction workers eating lunch and some of the signs plastered to the wall  along the south edge of the park.  The protest demands are among the more coherent of the bunch that have been proffered - and I've posted about some of them in the past.

Hydrofracking is one of the big issues that seems to have caught the attention of the protesters.  There are quite a few signs throughout the park calling for an end to hydrofracking (the measure is up for regulatory review in New York and could affect the NYC watershed and water quality throughout the state). 

Some of the military-grade tents that have gone up along the south side of the park. The first aid tent was even advertising that they were giving out free flu shots.

The location for the drum and prayer circles has slowly given way to an ever larger bunch of tents, pushing the drum circle into a smaller area. 

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Another one of the military-grade tents, compared with the lightweight tents used by most others throughout Zuccotti Park

The tents are still a hodgepodge of lightweight 2- and 4-person tents that are ill suited for the winter.

Devaney and McCarthy are considered two of the most influential people responsible for the market meltdown; Devaney oversaw a hedge fund, while McCarthy is a homebuilder who engaged in shady practices. 

The anarchists are trying to organize. And no, I'm not kidding - they're trying to gather for a November 15 action.

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Corzine's Big Bets Bust Major Financial Firm; Regulators Want To Know Where Investor Money Went

One of the sacrosanct rules in finance (and law) is that you never commingle investor/client funds with your own. It's one of the few automatic ways that a lawyer can find themselves disbarred.

Yet, we're now learning that the financial firm headed up by none other than former New Jersey Jon Corzine is potentially in hot water over being incapable of accounting for hundreds of millions of dollars of investor funds after MF Global went belly up after Corzine bet big on foreign funds and lost.

Federal regulators have discovered that hundreds of millions of dollars in customer money has gone missing from MF Global in recent days, prompting an investigation into the brokerage firm, which is run by Jon S. Corzine, the former New Jersey governor, several people briefed on the matter said on Monday.

The recognition that money was missing scuttled at the 11th hour an agreement to sell a major part of MF Global to a rival brokerage firm. MF Global had staked its survival on completing the deal. Instead, the New York-based firm filed for bankruptcy on Monday.

Regulators are examining whether MF Global diverted some customer funds to support its own trades as the firm teetered on the brink of collapse.

The discovery that money could not be located might simply reflect sloppy internal controls at MF Global. It is still unclear where the money went. At first, as much as $950 million was believed to be missing, but as the firm sorted through its bankruptcy, that figure fell to less than $700 million by late Monday, the people briefed on the matter said. Additional funds are expected to trickle in over the coming days.

But the investigation, which is in its earliest stages, may uncover something more intentional and troubling.

Sloppy controls my ass. Banks and financial firms know down to the penny how much is in individual accounts and that MF Global was playing games and can't account for where all the investor money was is not just troubling, but it shows that regulators failed in basic oversight to make sure that the brokerage was playing by the rules.

How did MF Global get in this mess? Corzine bet company money on European debt - and didn't have sufficient capital to back up the bets. He did the same kind of thing at Goldman Sachs where some of those decisions went bust, but Goldman Sachs could absorb some of those losses. Here, he's dealing with a much smaller firm and by buying up big holdings of debt from Spain, Italy, Portugal, Belgium and Ireland at a discount, he thought he could turn around and profit if the Eurozone fixed its mess. However, it wasn't to be.

So, while the bonds may have matured in less than a year - we've repeatedly seen that failure to have proper capitalization can lay low major financial firms. MF Global was taking inordinate risk and lacked sufficient capital reserves; that's where the issue of investor money comes into play. Regulators are now poring over whether the company used those investor funds to paper over and increase the capital behind the bond bet.

The CME and other regulatory bodies are already saying that MF Global broke the rules. The question will be determining the extent of the mess.

And criminal charges should be coming down the road too. You break these kinds of rules, and you're essentially stealing from your clients in the hopes that you can make back your money. It's a losing proposition and the brokerage industry needs to know that these rules aren't to be trifled with.

On the Wall Street Protests and Herman Cain's Misguided Critique

More tents have sprouted up at Zuccotti Park overnight and their donations have apparently increased significantly in the past 24-48 hours (to around $435k from $300k raised in the first 30 odd days since they started). The rain is expected to be quite heavy today and that's not exactly prime camping weather under the best of circumstances - it's got to be miserable for those who are staying there.

That leads me to the next point. Republican candidate for president and current frontrunner, Herman Cain mentioned yesterday during the debates that he thought that the protesters had the wrong target in mind for protests. When asked about the OWS movement, Cain thought that they should be protesting the White House for $1 trillion in failed stimulus and other failed economic policies, but he ignores that the economic troubles began before the stimulus package was envisioned, and before the TARP plan.

It began when Wall Street businesses engaged in highly speculative and risky repackaging of securities and no one had a clue as to their value, particularly when the real estate bubble collapsed.

That's not on the White House exclusively. That's on government (including Congress) failure of oversight to reign in the risks - and some of the blame falls on those who engaged in those transactions. That includes the so called masters of the universe on Wall Street who had no problem with these transactions and the credit ratings agencies who kept up the facade that all was well with these repackaged transactions until it was obvious to anyone with a pulse that they were worth less than junk bond status.

Protesting Wall Street may not accomplish anything other than raising awareness of the inequities inherent in the existing economic system, but that's still significant. Change has to come through voting in candidates who are committed to improving the system, not a wholesale dismantling of the system we have and floating economic policies that are a joke on its face (like Cain's 9/9/9 plan).

There is need for serious reform of the business oversight on Wall Street to avoid future meltdowns such as occurred during 2007-2009. That requires tackling both political and business issues. Neither is exclusive of the other because of the incessant flow of money into politics from the very businesses that are regulated by government.

More on the Zuccotti Park Protests

I just got back from Zuccotti Park, and it was more crowded than it's been in the past few days - and that's with the rain/drizzle and more rain forecast. Media trucks are plentiful and I've got to think that the threat of eviction to clean the park this morning energized the crowds and got more people to show up - and to show up to see whether the protesters would be evicted.

The end result is that there's a lot more people, but within the park itself it doesn't seem to be a police presence and things were its usual state of protest drummers and occasional chants - but peaceful.

Posting photos shortly.

UPDATE

Significantly larger crowds during the noon hour at Zuccotti Park today.

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UPDATE:
This particular incident occurred earlier this morning and deserves further scrutiny. A protester, who was later identified as someone belonging to the National Lawyer's Guild, was apparently hit and/or run over by a NYPD officer on a motorized scooter on Broadway. Here's the video:



It shows that the guy was up close and personal with the cop on the scooter, and then there's a scrum. The guy ends up on the ground, everyone pushes forward, and then the cops move in to move everyone out of the way - and appear to be arresting and/or treating/dealing with the guy who was "run over".

The guy at most had his foot run over by the scooter - not exactly getting run over by a car - and his reaction appears to be playing up the incident for the hoards of videographers and photographers present.

One thing to further keep in mind is that almost everyone in the protests and covering the protests has a camera of some sort - and many have video capabilities. Thus we'll get multiple views and Kurosawa would have a Rashomon field day.

CBS News reports that the guy lost his balance and was run over, which would indicate that it was accidental. But note that you've got photographers and videographers lining up to capture the scene (they block some key details in this video btw, like whether the guy purposefully put his foot in the way of the oncoming scooter and/or played up his injuries for the assembled media. Others in the crowd are busy shouting that the guy's leg was run over, which would be a neat trick considering the size of the scooter involved.

I expect to see an inevitable lawsuit against the NYPD for the incident - and this video may well be included as evidence.

UPDATE:
The NYT has more on the incident, including that the person was a legal observer for the NLG named Ari Douglas. Unlike the NYT representation of the video, I see the officer get off the scooter and attempt to contain the scene until other officers show up to assist. Note that there was a group of people converging on this officer at the critical moments when the man fell, and it's little wonder that the guy is now under arrest on multiple charges.

UPDATE:
The New York Times has updated its coverage and it notes that at least several independent eyewitnesses claim that Douglas purposefully put his foot under the scooter and that he was never trapped at any time.

The Daily News quoted one of its photographers, Joseph Marino, as saying that the scooter “definitely hit” Mr. Douglas but did not run him over. “I saw him sticking his legs under the bike to make it appear he was run over,” Mr. Marino said.

Mr. Browne said he was also told by The Associated Press that one of its photographers witnessed Mr. Douglas deliberately putting his feet under the scooter.

Brookfield Backs Off But Protesters Scuffle With Police As They Headed To Wall Street

Brookfield Properties, which owns Zuccotti Park, backed off demands that the protesters at the park clear areas so that the owners could clean the park of debris from more than three weeks of protests. The company can make its own rules/code of conduct for park usage, even though it is open for public use and enjoyment.

The 7:00AM decision to not clean the park was met with throngs of cheering protesters, some of whom braved the strong thunderstorms that rumbled through the region last night dumping more than an inch of rain on the area.

Yet, shortly after the decision not to clean the park was made, a group of protesters broke off from the main group and attempted to march on Wall Street itself with brooms and were met by police. There were clashes and arrests. Police claim that they were attacked by protesters hurling garbage and bottles. At least four people were arrested this morning. MSNBC reports 10 were arrested.

NBC News reported that police used the scooters to try to force protesters off of the street at several locations on Wall Street and Broadway.

In some cases, police rode scooters directly at people who stopped traffic and refused to move away.

Demonstrators threw bottles and one threw a garbage can at police, according to reporters on the scene.

WNBC reported that at least 10 people had been arrested as police tried to stop about 500 people, with brooms raised in the air, from marching on Wall Street.

NBC News said that one person who had been arrested was injured and bleeding and was taken to the 7th precinct for treatment. NYPD was extending shifts for some officers across the city in response to the situation.

Despite the police's efforts, protesters were gathering at the Stock Exchange, NBC News said.

Gothamist and the Daily News also has more photos, including one guy who has been interviewed by media outlets before wearing a Guy Fawkes mask. This particular idiot claims that he's protesting for the people but refuses to show his identity out of some misguided belief that he's doing so for the people. We'd just have to ignore that he's wearing a mask attributed to a guy who sought to overthrow the British government in a foiled terror plot (he has been involved in a plot to bomb the House of Commons).

Police are now checking identification cards for access to the Wall Street areas at Broadway and Wall Street.

Zuccotti Park Protests Continue, But Down At Wall Street....

The protests at Zuccotti Park by the Occupy Wall Street groups continue, and the press trucks are lined up as usual. What isn't typical is the pedestrian access in and around Wall Street itself. The NYPD has penned in the entire area with the ubiquitous barricades that have sprung up all over Lower Manhattan and they limit access to several of New York City's premier landmarks and tourist attractions. That's in addition to the restrictions in place since after 9/11.

Anyone trying to access the area now has to run the gauntlet.

You have to walk down and around Federal Hall to get to the other side of the street to view the New York Stock Exchange directly across the street. Police barricades prohibit access to the steps of Federal Hall itself, and to enter the famed building where George Washington took the oath as first President of the United States, you have to go around the back and enter through the rear of the building.

The steps are off limits to limit protests, but they have also limited access to one of the great buildings in New York City.

Good luck trying to get on those steps, which was a tourist destination for those seeing Federal Hall and Wall Street.

A view in front of the New York Stock Exchange where the NYPD has expanded its already large presence.

I thought this particular protester had some good ideas. This gentleman had a list of demands on how to improve the banking system.



That contrasts with the nuttiness of protesters a few steps away.

Protesters calling for investigations of Attorney General Eric Holder, and complaining about the US use of unmanned aircraft to take out terrorists.

Taking up prime space along the sidewalk on Broadway.

Which do you think will get more attention? The latter, of course, but that doesn't diminish the importance and relevance of what the lone gentleman calling for improved banking regulation and transparency has to say.

Also, the public square around 1 Chase Plaza has been cordoned off by the owners/building managers of that site, which is near to Wall Street and Zuccotti Park, likely to prevent a similar encampment.

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UPDATE:
I went back today to check out some of the photos, and it turns out the protester complaining that Johnson and Johnson was murdering people was an anti-fluoride loon. He thinks that J&J was murdering people with dental floss and anti-cavity rinses.

I kid you not.

Zuccotti Park Protests Continue; Now With Al Sharpton Sighting

Columbus Day observations have meant that there are more crowds than usual in and around Zuccotti Park. Part of that is due to a scheduled street fair on Broadway beginning at Liberty and running several blocks south towards the Battery. That means that there's quite a few more people milling around.

There's also quite a few more media trucks on the surrounding blocks, but the message is pretty much the same as in earlier days. In fact, most of the media has focused on the periphery of the park, but if you walk through the park, you'll find that interspersed among protesters are those who might otherwise be considered transients and otherwise camping out there because they could - not because they're protesting.

There seemed to be more posters calling for an "End the Fed" and there was a smattering of pro-Palestine or pro-Native American rights.

There was also a few conspiracy type posters:

Some groups have also brought their kids down to join the protests - allowing the kids to draw and scribble signs and that's added to the coverage.

Then, there's the crowd that has surrounded Al Sharpton, who's managed to find his way down to the park to attend:

He didn't say much that hasn't already been said, but the media and gawkers were out in force

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UPDATE:
Damn. I missed Jimmy "The Rent Is Too Damn High" MacMillon and Susan Sarandon at the protests too.

Here's your Heh moment:

the protesters are starting to notice folks taking advantage of the demonstration by grabbing some of the free food and clothes that have been made available in Zuccotti Park.

“The tourists take all the food, and the hipsters take all the clothes,” said one demonstrator.

And thus far, Anonymous hasn't been able to do anything to take down the NYSE (or their website).