According to Bloomberg, the decision came after a fourth quarter that some analysts predicted was the worst for investment banking and trading since the financial crisis in 2008. Last year companywide compensation and benefits rose 6% to $12.7 billion as revenue climbed 13%.

This is the latest news of how the financial crisis is beginning to catch up with Wall Street. Last year we heard announcements from UBS, Citigroup, Morgan Stanley and others that they are planning significant layoffs.

What’s your take on bonuses at investment banks? Will we see more caps in the future, or will investment banks have to become more stingy in other areas?

Although the Trust was established in 1969 to provide financial assistance to customers if a brokerage became insolvent, because federal laws required customer funds to be segregated made the prospect that customers actually would need the money remote. As a result, the CME board voted to turn the Trust into a charitable foundation in 2005.

Some of the largest beneficiaries of the CME have been the Renaissance Schools Fund, which supports charter schools and has received $3.1 million since 2006; the University of Chicago, which has received $2.5 million since 2006, and the Erikson Institute, which specializes in early childhood education and has received $1.625 million.

As a result of the MF Global bankruptcy, CME has put all future grant applications on hold, but has said it will honor current grant obligations.

“If this can happen to a highly regulated company like [MF Global], who can we trust in the future? Now speculators have three concerns: 1. The market, 2. Our own poor judgement and 3. To hope the clearing [firm] will not steal the accounts.” Futures reader

It’s time to wipe that smug smile off our face, the “our” meaning the futures industry. The bankruptcy of MF Global revealed a breakdown of an industry that has thrived knowing that customer margin was “safe” because of segregated fund protections. The sacrosanct institution of protecting margin at the exchange clearinghouse level while enforcing a strict segregation at the clearing firm has been tested throughout the years: Refco, Stotler, Lehman, et al. Sometimes it wasn’t as it should be: Volume Investors, Sentinel. But typically the funds were moved over with accounts and positions so clients would not have to worry about where their money was in addition to market risk.

Having covered many of these firm failures — my first was in the 1980s when Volume Investors went down in flames because of the overtrading of three of its customers — I’ve learned moving funds is never flawless, but typically gets done quickly. Some events have had major snags, like the Baring default when overseas exchanges froze all Baring margin accounts. And of course Volume Investors was a disaster, largely because commodity options were so new and basically no margin was required on far out-of-the money positions. Although other clearinghouse members were fine, customers who had margin money at Volume had their funds frozen. The reality is that an exchange clearinghouse is obligated to its members, not to the customers of the clearing firm.

Enter MF Global, which adds some new wrinkles (see Trendlines overview, and “Top 50 Brokers: This one is on us” by Managing Editor Dan Collins):

1. Securities Investor Protection Corp. (SIPC) immediately took control of the bankruptcy after a request by the CFTC and Securities and Exchange Commission. Although SIPC took over the Lehman failure, Lehman’s futures commission merchant (FCM) and broker/dealer were able to send funds/accounts to Barclays before going into bankruptcy and before SIPC took control. MF Global didn’t have that luxury. Why?
2. Missing segregated funds at MF Global complicated the moving of seg funds. Required margin held by the exchange was fine, but roughly $633 million in excess margin held by the firm somehow disappeared between the time the CME Group — MF’s designated self-regulatory organization (DSRO) — audited MF Global the week of Oct. 24, and the following Monday, Oct. 31, when the firm declared bankruptcy. The funds — still publicly missing as I write this, 14 days after the firm went down — have been blamed on sloppy bookkeeping by MF Global. Of course it could be something more sinister, but if sloppy bookkeeping is a possibility, wasn’t this ever seen during audits? And does it really take more than a week to find $633 million, especially when the CME just had done an audit? And what about the outside auditor? Further, on July 31, 2011, the CFTC FCM Financial Data report showed MF Global already undercapitalized, so why wasn’t an auditor or regulator camping out at the firm?

Perhaps most blame should go to the trustee, who didn’t seem to understand the rules of the game. But the CFTC deserves as much blame, abdicating its responsibility when a huge majority of the MF Global accounts were futures based. Then of course blame the DSRO, which apparently dropped the ball on monitoring MF Global when things heated up.

So trading just got riskier, and the futures industry has been humbled. But worse, its bedrock — segregated funds — is now under fire while thousands of MF Global customers get burned.

DeNiro also will executive produce the production along with his partner Jane Rosenthal, through their company, Tribeca Productions. The movie will be based mainly on the book “The Wizard of Lies: Bernie Madoff and the Death of Trust” by Diane Henriques.

The movie will give the Hollywood treatment to Madoff and his $60 billion Ponzi scheme, the largest in such scheme  in U.S. history. Madoff was arrested in December 2008 and currently is serving a 150-year prison sentence at the Butner Federal Correctional Complex in North Carolina.

Another movie based on the premise of investor fraud, “Tower Heist,” is doing well in theaters right now, earning more than $64 million in global box office sales.

Blame it on the “speculators.” Game of the week in Congress (only because Congress goes on holiday every other). A rational person (but see “holidays” above) would know that most prices rise (falls are “good”) for 25 different reasons. But it is so less strenuous to find one culprit.

Why do the derivatives markets attract these deviates while the stock markets rely on the prudent, cautious, venerable investor?

I have taught at some of the nation’s finest law schools and my opening remarks to students focus on that question. It is perhaps, educationally, my greatest contribution to the entire course. I tell them that it is critical (sometimes I say “vital” but that is an exaggeration) to know the difference.

Speculators: Those who risk capital on the outcome of future events over which they have no control.

Investors: Those who risk capital on the outcome of future events over which they have no control.

Shock! Disbelief! And, finally, knowledge.

The truth is that the securities community got the better wordsmiths while the derivatives folks allowed the jargon to be set elsewhere. Sad, because the millions of shareholders in Exxon Mobil are True Citizens while those who take the same risk in crude oil are reviled.

Somewhere, out there, is an English Ph.D who is looking for work. Hire him or her to level the semantic playing field. Speculators take the same risks as investors (except that the latter pay the mega-fines when management screws up). And speculators are the many mini-insurers who protect the corporate bottom line.

The word “saint” may be a stretch since you might not want to befriend many of them, but they do copious good despite their intentions. Like investors.

Gold has been found to increase the conductivity of cells and the inclusion of gold nanowires improved the organized contractions of heart cells resulting in an overall stronger heart beat. There even is speculation that this technology could be incorporated into other parts of the body including the brain or spine.

Although the amount of gold used is miniscule (wires average 30 nanometres thick and two to three microns long, and are just visible to the naked eye), heart surgery already is an expensive undertaking and adding a commodity that now is more expensive than platinum to the mix definately won’t help cut any costs.

Why must politicians journey to D.C. to conduct business? Is it that they cannot master the laptop? Do they need to use sign language to communicate.

No, it is because they need a special place, away from constituents, where they can conduct “business” below the public radar.

Send them home! Let their neighbors see the taxpayer-funded limo in their driveways. Let the local press cover their airport departure on a “fact-finding” mission to Bora Bora. Let them experience constituents’ complaints each morning as they retrieve the newspaper.

Washington (a lovely city where we lived happily for nearly a generation) has become a secret society for politicians who do not “return” there to conduct the nation’s business but to carry out very private agendas that are remote from constituent needs.

Stay in place. Debate and decide via a plethora of electronic media as managers of multinational corporations do every day. Why, most of the work conducted by the Securities and Exchange Commission’s many offices is done this way, as is also true at the Commodity Futures Trading Commision’s fewer but busy locations.

Imagine the relief for Washingtonians! No more traffic snarls from endless motorcades blocking the streets for hours on end. No more “reserved” parking at Reagan and Dulles airports for the political class. No more confusion among tourists about when and how they can visit the great monuments and museums.

Centralized government has become an unaccountable zone. If you don’t believe me, just wait.

Hence, instead of the usual prattle about whether a president should be seen vacationing during tough economic times or when major events occur, a new word is created — optics — and we discuss whether his judgment is skewed because he should know how it looks or more accurately how the other side would try and exploit it. 

So we ignore the silliness of the same media pundits who defended president Bush 41 for spending time in Kennebunkport during the first Gulf War, Bush 43 for setting a record for vacation time much of it during myriad of crises, criticizing President Obama. And we ignore that those defending Obama where the same ones talking up the insensitivity of past presidents taking vacation time amid crises.

The script goes, “It is not whether President Obama is shirking his responsibilities by taking a long vacation in a snooty playground of the rich, Martha’s Vineyard, it is how that looks to people who are struggling in a weak economy with high unemployment.”

Stop it. It is a boring, lazy story borne from having nifty photos and needing to do something with them and our bifurcated media world where people go to get their personal prejudices validated.

All presidents deal with issues 24-7 and can get the necessary information delivered to them. Everyone knows this, but we have pictures.

This tendency is troubling. Not because of the optics but because coverage of important and albeit complex issues continually get pushed aside for silly talk. It is not as if this is necessitated by a slow news environment. There is much to report on. We should be hearing about what policy a president is enacting, or not, to help improve the situation.

That is the great thing about covering trading, it is pretty easy to determine the importance and the impact of results. Prices move and they have a real impact; not on perception but in real dollars and sense.

A few years back the word was “green shoots,” referring to economic progress following the “Great Recession.”  Turns out most of those green shoots withered on the vines and we are just now talking about some of the policies and people who helped get us in the mess we are still trying to extract ourselves out of.

I am a little surprised that no one spoke of the optics of the Fed’s Jackson Hole symposium. Especially given that Fed Chairman Ben Bernanke did not offer anything new. He did throw it back to the President and Congress. Perhaps they can work on moving the economy forward and forget about the optics of it all.

Stop with the buzz words and start covering detail.

Yes, Italy and Spain are on the brink but why should the Dow or S&P care?

Let’s use this non-sequitur to our advantage.

“Dow plunges as Phil Johnson retires.”

“Markets shaken amid confusion over L.A. Dodgers’ future.”

“Stocks plunge as Japanese radiation expands.”

“Economy suffers amid speculation over future of “All MY Children.”

All correct in their own perverse way. But journalism?