Here Comes The Coverup

Minneapolis Star-Tribune:

Dennis Magnuson is a farmer, not a gambler. He trades in the commodity futures markets hoping to stabilize the cost of feed for the pigs he sells. The Austin, Minn., resident said he would never put his money into bonds issued by European countries flirting with economic collapse.
But the now-collapsed MF Global Holdings Ltd. may have done that for him.
Magnuson is among more than 100 Minnesota farmers estimated to have assets frozen as a result of MF Global's bankruptcy filing and an estimated $1.2 billion in missing customer funds. Most of the farmers didn't choose to do business with the huge brokerage house that has become one of the biggest financial failures in U.S. history. They invested through brokers or financial advisers who eventually used MF Global to clear trades.
On Thursday, members of the Senate agriculture committee, including Minnesota Democrat Amy Klobuchar, grilled the heads of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) over apparent loopholes in rules that allowed farmers' commodity trades to end up in risky European bonds.
"[Regulators] are still investigating if what [MF Global] did was illegal," Klobuchar said in an interview after the hearing. "And it may well have been illegal. We don't know that yet. But what we know is that the law is inadequate when it comes to disclosing transactions like they made ... it is possible that they were able under existing law to hide those risky transactions."

Also, the Financial Times says, "MF Global accessed client funds for weeks."

So, again, it may be legal to pilfer from custodial accounts?  If Jon Corzine doesn't go to jail, we are completely screwed.  But you can say one thing, deregulation in the CFTC has so skewed things that the rules may make theft ok.  Nobody seems to know for sure.  This will be a real test for the Obama Justice Department.  If charges aren't forthcoming by spring, something is terribly wrong.  It will be pretty clear that friends are being allowed to walk away from crimes they should be prosecuted for.