From Megan’s Law to JFK Airport, laws, rules and landmarks across the country are named after victims, heroes or important people. So why are financial regulators making Jon Corzine the eponymous hero of change? The National Futures Association (NFA) is contemplating implementing the “Corzine Rule” which will require principals of a futures firm to sign off on transferring sizable amounts of customer funds. But, why should Corzine get the glory?
There is no “Madoff rule” or “Enron law.” The offenses committed by Madoff, Enron and others over the years spawned regulations that were not named by the perpetrators presumably because the changes were so necessary and so great that the origin of the need for investor protection would not be forever connected to one individual or firm. Corzine was at the helm of MF Global when it filed for one of the largest bankruptcies in history and it took months for investigators from all government agencies to excavate the damage and uncover millions of dollars in missing customer money.
So, yeah, the “Corzine Rule” sets a brilliant precedent: negligence equals legacy. Next we will have streets named after criminals: “sure, just send the documents to 123 R. Allen Stanford Street, New York, NY.” Absurd.
The tenets of the proposed “Corzine Rule” are mandatory. It seems to be a bizarre reality that employees at funds have been allowed to make transfers with no oversight given that this lack of checks-and-balances is one of the causes of the MF Global debacle (among other incidents that bilked investors). Even Kweku Adoboli (remember him?), the trader who went “rogue” (according to UBS) and lost $2 billion in trades, knew he should have had more oversight of his actions.
The NFA’s new operating standard should be called the “Natch Rule.” As in: Oh, you want your money protected? NATCH.