Not Much Illumination: JP Morgan, MF Global & Man in the Middle, Jamie Dimon

Not Much Illumination: JP Morgan, MF Global & Man in the Middle, Jamie Dimon

The more I write about banks, auditors, legislators, regulators and the big money that passes amongst them, the easier it is to see the connections between them all.

Jonathan Safran Foer wrote a book in 2002 called Everything is Illuminated. According to Wikipedia, the novel tells the story of...

"...a young American Jew who journeys to Ukraine in search of Augustine, the woman who saved his grandfather's life during the Nazi liquidation of Trachimbrod, his family shtetl. Armed with maps, cigarettes and many copies of an old photograph of Augustine and his grandfather, Jonathan begins his adventure with Ukrainian native and soon-to-be good friend, Alexander "Alex" Perchov, who is Foer's age and very fond of American pop culture, albeit culture that is already out of date in the United States. Alex studied English at his university, and even though his knowledge of the language is not "first-rate", he becomes the translator. Alex's "blind" grandfather and his "deranged seeing-eye ***," Sammy Davis, Jr., Jr., accompany them on their journey. Throughout the book, the meaning of love is deeply examined."

It's widely believed that the title of the book comes from a line in one of my all time favorite novels The Unbearable Lightness of Being by Milan Kundera:

"In the sunset of dissolution, everything is illuminated by the aura of nostalgia."

I'm sure MF Global customers are waxing nostalgic for their missing money, but not much light has been officially shed yet on the mystery of its whereabouts. A preliminary "investigation" report from MF Global SIPA proceeding trustee (that's the bankruptcy process for the broker/dealer), James Giddens, comes up short. I use quotes for the word "investigation" because this is not a bankruptcy examiner's report in the grand tradition of Tony Valukas' Lehman Report, or Michael Missal's New Century Report or even Josh Hochberg's Refco Report. Giddens is no investigator and we get very few answers, especially to the fundamental question, "Where is the $1.6 billion of missing customer money?"

(Louis Freeh, the MF Global Holding Company trustee also published a report but it is nearly worthless given its lack of candor and sniping at Giddens. I'm looking forward to meeting Freeh at the Stanford Law School Directors' College in Palo Alto, June 24-26.)

Giddens is using Ernst & Young as his forensic investigation firm. In addition to all the other conflicts Giddens - and Freeh - have with JP Morgan and MF Global auditor PwC, the use of Ernst & Young in this context should not have been allowed.  Ernst & Young is the same firm, according to sources, that designed and implemented MF Global's internal controls in time for its first Sarbanes-Oxley review and same firm that Randy McDonald, the MF Global CFO prior to current CFO and PwC alumni Henri Steenkamp, worked for.

Read this article in its entirety at the re: The Auditors, a blog by Francine McKenna.

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