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Did MF Global Outwit Regulators and Prosecutors?
CNBC.com | March 13, 2012 | 10:42 AM EDT

A failure to bring criminal charges arising from the disappearance of $1.6 billion of customer funds from MF Global will be a damning indictment of the financial regulatory system in the United States.

We know this one basic fact: around $1.6 billion of MF Global's customers' cash went missing from their accounts in the days or weeks leading up to the bankruptcy of the firm. It has not been recovered. It probably never will.

The odds are that the money went out as loans or collateral for loans to MF Global counterparties. The MF Global executives who somehow tapped into customer funds to float their operations during the firm's liquidity crisis almost certainly expected they'd get the money back. They didn't really believe that the firm was going to die, that the money would be lost forever. In fact, the very act of tapping into customer accounts seems to indicate that they had a misplaced sense of confidence that they'd pull through this.

We also know the money isn't "gone." Funds do not vanish. They do not evaporate. They get transferred. Most likely, in this case, they were transferred to counterparties. Most likely to big creditors both in the U.S. and abroad. There are wire transfer records of these funds being moved. We can find out where they went.

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