Sentinel Ruling and MF Global
On August 9, Reuters reported on a ruling by a federal appeals court that upheld a lower court ruling involving Sentinel Management Group. That ruling could be used by former MF Global CEO Jon Corzine to avoid a trial involving the use of customers funds.
Apparently, Sentinel took customer funds and placed them into another account and then used that account as collateral for a loan from the Bank of New York Mellon. When Sentinel collapsed, a lower court ruled that the Bank of New York Mellon was first in line to get reimbursed, ahead of the individual account owners whose money was illegally moved out of those sequestered accounts.
This is bad. Very bad.
This gives former Obama campaign bundler, former CEO of Goldman Sachs, and former Governor New Jersey Jon Corzine a ruling that sets precedence that it is no longer illegal to use sequestered customer funds to back investment firm accounts. People who had their accounts with MF Global won't get their money back and Corzine won't even be going to trial, much less to jail.