Wishful thinkers can hope that the MF Global bankruptcy filing and the dubious actions that followed to protect the biggest interests involved (e.g., Jon Corzine and JP Morgan) might finally lead to the dismantling of the Washington-Wall Street connection that seems to be a key component in the nation’s downward spiral in recent years.
One step in that direction originates in this part of the country where, according to this Bloomberg story, farmers are suing MF Global in an attempt to recover their money.
The lawsuit filed today by three farmers and a cattle- raising operation in Montana seeks to represent a nationwide group of commodities futures customers whose money went missing amid the $41 billion bankruptcy of MF Global, parent of the futures brokerage that is being liquidated. A trustee is looking for $1.2 billion or more in money missing from commodity customers’ accounts.
Corzine, the former governor of New Jersey, and other executives at MF Global made “knowingly false statements” to induce the plaintiffs to enter into contracts with the brokerage, according to the complaint filed in federal court in Missoula, Montana.
The executives failed to disclose to customers that their money was used to finance MF Global’s bad bets on European sovereign debt, the farmers said in the complaint.
What’s really disturbing about the whole idea of farmers suing Wall Street futures trading firms is that, more than 100 years ago, futures markets were originally set up in the MidWest specifically for farmers and that system worked pretty well until the last decade or two when Wall Street began to really throw its money around.
Futures markets had always been a way for buyers (e.g., food manufacturers) and sellers (e.g., farmers) to lock in prices and add some predictability to their business while a relatively few number of speculators would bet on which way prices would go, adding liquidity to these markets in the process.
Now, you’ve got some well connected, ex-Goldman Sachs head who manages to run a futures trading firm into the ground and a billion dollars – some portion of it belonging to farmers all across the country – goes missing.
What a sad commentary on the direction the nation has been heading.