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Wednesday, November 2, 2011

MF Global and Presumed Guilt

Multiple media sources report that MF Global is under federal criminal investigation pertaining to allegations of illegally converted customer funds for use to finance the brokerage's operations. 

In such investigations, given the high profile of the brokerage and of its chief executive, former New Jersey Governor Jon Corzine, there is an operational presumption of guilt.  This means that the investigation should be assumed to operate on the premise that someone committed a crime.  The concept of innocent until proven guilty is a concept honored in the breach, and respected only before the court (which, fortunately, it has effect and may be the last but best protection of your freedom from government abuse). 

Furthermore, the investigation should not be viewed as a "fact-finding" operation but more like an exercise in validating the original theory, which is that someone has committed a crime.  After all, people are human and humans like to prove they are right. On the surface and in press conferences, the protestations will be that there is an ongoing investigation, but in reality, the "targets" of the investigation will be determined very rapidly. (And quite possibly, they will be determined -- and the government will be wrong.)

Almost all titled executives of MF Global should consider hiring experienced white-collar criminal lawyers who are adept at handling financial fraud cases and who possess some understanding of the securities laws.  Many of these people will fall under suspicion for no reason other than their title at MF Global.  That factor, without more, is an excellent reason to hire a lawyer.  If one is indeed innocent, this need to hire a lawyer is actually greater!

The investigation may not be quick.  There may be substantial documentation to sift through, and each party ultimately charged will have its chance to go through the same evidence.  I would not expect a quick resolution of any MF Global investigation.

Eric Dixon is a New York investigative lawyer who handles complex investigative matters and trains targets of government investigations how to handle the stress and other emotions commonly felt by people under investigation or being prosecuted or sued.  Mr. Dixon has substantial experience with the securities laws, compliance and corporate transactions.  Mr. Dixon may be reached for comment or inquiry at 917-696-2442 or by e-mail at edixon@NYBusinessCounsel.com.
    

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