Streetwise Professor

October 30, 2012

Why is Edith O’Brien Still in Legal Limbo?

Filed under: Clearing,Commodities,Derivatives,Economics,Exchanges,Politics,Regulation — The Professor @ 8:20 pm

Mere days after the collapse of MF Global, I was told by someone who would have reason to know that the key to unraveling the MF mystery was Edith O’Brien, the firm’s assistant treasurer.  A year later, Ms. O’Brien is still in limbo, refusing to testify without immunity from prosecution.

The likelihood that Ms. O’Brien would have conceived of and executed a massive fraud-the looting of MF Global customer segregated funds-is close to zero.  If there was a crime, it would have been conceived of and directed by someone far higher in the firm than Ms. O’Brien.

Prosecutors routinely give immunity to low-level employees in order to build a case against higher executives.  Prosecutors in the MF Global matter seem to be deviating from that routine.  This raises questions, the most notable of which is: are they departing from SOP because the individual who could be implicated is a well-known and highly connected Democratic politician, a former governor and senator, and bundler for Obama?

Maybe there’s a different explanation, but I’m hard pressed to think of one.

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