Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : The Obama - Clinton Disaster -- Ignore unavailable to you. Want to Upgrade?

To: Wayners who wrote (68149)	3/27/2012 1:01:31 AM
From: Hope Praytochange	2 Recommendations Respond to of 103300

J.P. Morgan Tops the Witness List By AARON LUCCHETTI A House subcommittee said a top lawyer at J.P. Morgan Chase JPM +2.24%& Co. will testify at a highly anticipated hearing Wednesday into the collapse of MF Global Holdings Ltd. MFGLQ -5.26% Diane Genova, a deputy general counsel at J.P. Morgan, was one of seven witnesses announced by the House Financial Services subcommittee on oversight and investigations. The New York bank declined to comment Monday on Ms. Genova's likely testimony. J.P. Morgan hasn't previously been questioned by lawmakers about its ties to MF Global. J.P. Morgan was one of the largest lenders to MF Global, cleared trades for the firm and served as a custodial bank for its segregated customer funds, according to a memo released by the subcommittee Friday. An estimated $1.6 billion still is missing from customer accounts at MF Global, which filed for bankruptcy protection Oct. 31. Lawmakers have said J.P. Morgan ended "its customary intraday credit extension relationship" with MF on Oct. 27 after the securities firm was downgraded by credit raters. That credit line provided as much as $432 million in liquidity that was "similar to overdraft protection," the subcommittee said. The next day, MF Global moved $200 million from a segregated customer account to cover an overdraft of about $175 million in an MF Global account at J.P. Morgan in London, according to lawmakers and documents reviewed by The Wall Street Journal. Such accounts are allowed to hold customer money and a firm's own money. As reported by the Journal last month, the transfer came after Edith O'Brien, an assistant treasurer at MF Global, told colleagues in an email shortly before 9:30 a.m. Eastern time that she needed $175 million "sent immediately." Ms. O'Brien wrote in an email that she moved the money "Per JC's [Jon Corzine's] direct instructions," a reference to the firm's chief executive, according to the memo released Friday. The memo didn't indicate when the email was sent. It took several hours to move the money between two MF Global accounts and then to the J.P. Morgan account, a person familiar with the situation said. Ms. O'Brien also is on the witness list released Monday but is expected to decline to answer questions, citing her constitutional right against self-incrimination. Mr. Corzine has told lawmakers that he instructed Ms. O'Brien to fix the overdraft at J.P. Morgan but never told anyone to misuse customer funds and was never told customer funds had been used to fix the problem. Laurie Ferber, MF Global's general counsel, told the subcommittee in prepared testimony that Mr. Corzine asked her to "review a compliance certificate" from J.P. Morgan that all transfers complied with federal rules on the use of customer segregated funds. MF Global didn't return the document or a revised version because it "was still too broad" and sought assurances for "all transfers and withdrawals made on or after October 28, 2011," according to her testimony. She approved a narrower request the next day. The document was never returned to J.P. Morgan, people familiar with the matter said. MF Global finance chief Henri Steenkamp plans to tell the panel he had "limited knowledge" of money transfers during the securities firm's final days. Mr. Steenkamp was "taken up with other very serious matters," including trying to negotiate a last-ditch sale of the New York company. —Mike Spector contributed to this article.