Tags: Commodities | Trader | MF | Global

Brash Commodities Trader Shakes Up MF Global Case

Thursday, 12 Jan 2012 11:40 AM

 

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If Wall Street power broker and politician Jon Corzine is the face of MF Global Holdings' collapse, commodities trader James Koutoulas has become the face of its customers.

Koutoulas, a 31-year-old Chicago fund manager who has been in the markets for more than half his life, has become a vocal advocate for about 8,000 MF Global brokerage customers who are demanding full return of the money in their accounts.

In a short time, Koutoulas, who runs Chicago-based commodities firm Typhon Capital, has made a big impact in MF Global's bankruptcy, as the search continues for hundreds of millions of dollars in missing customer funds.

He has pushed for the full release of cash trapped in client accounts, and challenged the role of JPMorgan Chase & Co. in the bankruptcy. A meeting in New York on Thursday will give Koutoulas and other customers an opportunity to air their grievances with the MF Global brokerage trustee, the man charged with recouping customer money.

Koutoulas first entered the case on behalf of his own clients, who had $55 million tied up with MF Global when the firm went bankrupt. He was surprised when his efforts gained attention and other customers sought to join forces, quickly making him the de facto advocate for nearly all customers as head of the grassroots Commodity Customer Coalition.

But Koutoulas, who is also a lawyer, plays down the "boy wonder" label he's picked up from cohorts.

"You've got to understand, Alexander the Great was commanding 48,000 troops at 24," the former University of Florida classics scholar told Reuters in an interview at Typhon's New York office.

"It's not like I'm going to war," he said, sitting in Typhon's dimly-lit conference room. "Guys go to war at 18. I'm gonna be afraid of some fat guys in suits in bankruptcy court?"

Koutoulas, whose face is framed by thick black glasses and a shock of dark hair, was born in Indiana and raised in South Florida. He has been trading since age 15. While still a teenager, he purchased multiple cars, including at least one vintage Jaguar, on profits from trading technology stocks during the dot-com boom.

He graduated from Northwestern University Law School in 2006, a move that allowed him to manage his own legal matters in his trading work. He made stops at a risk management firm and fund-of-fund consultancy before founding Typhon in 2008.

Koutoulas' Greek classics roots never left him: Typhon gets its name from the hundred-headed Greek titan, dubbed the "father of all monsters" and imprisoned for all eternity. The firm's investment products — for example, Hydra — are named after Typhon's children.

A WAR FOR CUSTOMERS

MF Global Holdings went bankrupt after the extent of its bets on European sovereign debt became public knowledge. Its CEO, ex-New Jersey governor and former Goldman Sachs chief executive Corzine, resigned four days later.

Even as Koutoulas rejects the idea of combat, he can't help invoking images of battle.

In December, he issued a "declaration of war" against JPMorgan, saying the bank wore too many hats as MF Global's primary lender and custodian for its customer funds.

He says he has never been embarrassed or shied away from speaking his mind.

"I never had structure or a fear of authority," he said, recalling growing up in a household with a quiet, Greek-born father and doting mother.

"Maybe that's why I have no problem calling out Jamie Dimon," he said, referring to JPMorgan's chief.

Koutoulas has called for a full investigation into the bank's role. He succeeded in persuading U.S. Bankruptcy Judge Martin Glenn to order a limited probe into whether certain collateral held by JPMorgan may actually belong to customers.

His criticism has not sat well with JPMorgan, which, he said, canceled his personal credit card after his public jabs. The bank had no official comment on the matter.

JPMorgan spokeswoman Mary Sedarat did say, however, that Koutoulas' general criticism of the bank was "riddled with misinformation and totally without merit."

Koutoulas has also been a thorn in the side of Giddens, the MF Global trustee. Giddens has recovered about 72 percent of the money that had been frozen in customer accounts. But Koutoulas' group has pushed for full recovery, even if it means seeking that recovery from other MF Global entities if there is a shortfall at the brokerage.

He questioned Giddens' competence in November, saying the bankruptcy lawyer "didn't know how to read a commodities statement" and lacked the "know-how" for the case. He began to warm to Giddens, he said, after the trustee agreed to meet with him regularly.

His outspokenness still draws occasional cringes from colleagues. Fellow coalition leader David Rosen laughed uncomfortably as Koutoulas spoke with Reuters, urging him at times to rein himself in.

But Koutoulas and his allies are not letting up. They want access to Giddens' probe into the shortfall, and for Giddens to play a more active role in the bankruptcy of the MF brokerage's parent, whose assets could be a target of customers.

The trustee is considering "all causes of action" against entities that may potentially have customer assets, possibly including the parent, said Giddens spokesman Kent Jarrell.

At Thursday's customer meeting, Koutoulas's group hopes to hear more about how Giddens calculated his $1.2 billion customer shortfall estimate, as well as when he expects to return all customer money. The trustee's office is expecting a few hundred customers to show up.

One of those will be Koutoulas. And if the trader's rough-and-tumble manner rubs some the wrong way, it may also be the reason he's now at the center of the MF Global fallout.

"If James didn't do this, who would've?" Rosen said.

© 2014 Thomson/Reuters. All rights reserved.

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