You Know a Backbone When You See It

Is it any wonder we have federal budget difficulties? Take a gander at the money management skills at former Senator Jon Corzine’s MF Global firm and you witness activities that give a whole new meaning to the term “shell game.” What has emerged about the frantic transfers of funds during MF Global’s final days before bankruptcy is disturbing on so many levels, but there are two shining exemplars amongst the rubble and now emerging ruffian tactics of the firm taking money from Peter to pay Paul, even as Peter was clueless about the use of his funds. Oh, what backbone was demonstrated amongst the desperation!

As MF Global tried to transfer funds to settle accounts with trading partners, the folks at JPMorgan Chase put out a big, “Whoa, partner!” and questioned the source of the funds being used. The bank with a backbone inquired as to whether MF Global was using customer account funds in violation of CFTC rules. JPMorgan wouldn’t even take the assurances of a backroom flunky that MF Global responded with; it wanted Mr. Corzine to provide a written guarantee that the funds were not coming from customer accounts. That wily chairman Corzine handed the request for a written guarantee off to MF Global’s general counsel, Laurie Ferber. Ms. Ferber refused such assurances on the grounds that MF Global did not provide such special assurances.

Now, the Barometer realizes that Ms. Ferber’s response was both code and protective language because no lawyer with an IQ over 30 would have signed his or her name to such an assurance when said counsel had probably figured out that MF Global’s books and records would have finished first over Berford’s Gas and Guzzle in a contest for seat-of-the-pants efforts on cash-flow accuracy and internal controls. MF Global filed for bankruptcy two days after the Ferber refusal. Be that as it may, when an elephant flies, you don’t fault it for not staying up in the air long enough.

The bottom line is that both JPMorgan Chase and Ms. Ferber did the right thing – they refused to allow transactions to go through that might be in violation of the law – transactions that would result in the depletion of customer accounts. They both showed backbone and stood up to Mr. Corzine, a powerful political and Wall Street figure. Through their actions they threw down the penalty flag and stopped the game. When we are treated to a witness of backbone, hope springs eternal for market trust. Next time, just throw down the flag a bit earlier so that Peter doesn’t lose so much.

About mmjdiary

Professor Marianne Jennings is an emeritus professor of legal and ethical studies from the W.P. Carey School of Business at Arizona State University, retiring in 2011 after 35 years of teaching undergraduate and graduate courses in ethics and the legal environment of business. During her tenure at ASU, she served as director of the Joan and David Lincoln Center for Applied Ethics from 1995-1999. In 2006, she was appointed faculty director for the W.P. Carey Executive MBA Program. She has done consulting work for businesses and professional groups including AICPA, Boeing, Dial Corporation, Edward Jones, Mattel, Motorola, CFA Institute, Southern California Edison, the Institute of Internal Auditors, AIMR, DuPont, AES, Blue Cross Blue Shield, Motorola, Hy-Vee Foods, IBM, Bell Helicopter, Amgen, Raytheon, and VIAD. The sixth edition of her textbook, Case Studies in Business Ethics, was published in February 2011. The ninth edition of her textbook, Business: lts Legal, Ethical and Global Environment was published in January 2011. The 23rd edition of her book, Business Law: Principles and Cases, will be published in January 2013. The tenth edition of her book, Real Estate Law, will also be published in January 2013. Her book, A Business Tale: A Story of Ethics, Choices, Success, and a Very Large Rabbit, a fable about business ethics, was chosen by Library Journal in 2004 as its business book of the year. A Business Tale was also a finalist for two other literary awards for 2004. In 2000 her book on corporate governance was published by the New York Times MBA Pocket Series. Her book on long-term success, Building a Business Through Good Times and Bad: Lessons from Fifteen Companies, Each With a Century of Dividends, was published in October 2002 and has been used by Booz, Allen, Hamilton for its work on business longevity. Her latest book, The Seven Signs of Ethical Collapse was published by St. Martin’s Press in July 2006 and has been a finalist for two book awards. Her weekly columns are syndicated around the country, and her work has appeared in the Wall Street Journal, the Chicago Tribune, the New York Times, Washington Post, and the Reader's Digest. A collection of her essays, Nobody Fixes Real Carrot Sticks Anymore, first published in 1994 is still being published. She has been a commentator on business issues on All Things Considered for National Public Radio. She has served on four boards of directors, including Arizona Public Service (1987-2000), Zealous Capital Corporation, and the Center for Children with Chronic Illness and Disability at the University of Minnesota. She was appointed to the board of advisors for the Institute of Nuclear Power Operators in 2004 and served on the board of trustees for Think Arizona, a public policy think tank. She has appeared on CNBC, CBS This Morning, the Today Show, and CBS Evening News. In 2010 she was named one of the Top 100 Thought Leaders in Business Ethics by Trust Across America. Her books have been translated into four different languages. She received the British Emerald award for authoring one of their top 50 articles in management publications, chosen from over 15,000 articles. Personal: Married since 1976 to Terry H. Jennings, Maricopa County Attorney’s Office Deputy County Attorney; five children: Sarah, Sam, and John, and the late Claire and Hannah Jennings.
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