Money missing from MF Global may be twice as large as previously suspected
Disarray of MF Global's records increases difficulty of finding where money went
Lost customer revenues, to the tune of $1.2 billion, which is double
than the previous estimates remain unaccounted for from M. F. Global.
That's the latest bit of news from the trustee dismantling the firm's
brokerage unit this week.
Regulators currently suspect that MF Global previously ran by Jon S. Corzine, the former Democratic governor of New Jersey improperly used customer money for its own purposes in the days before filing for Chapter 11 protection on Oct. 31.
The new figure still highlights the disarray of MF Global's records. It's going to be ever increasingly difficult for the tens of thousands of customers seeking to get their money back. The trustee's estimate represents a significant portion of customer funds held by MF Global.
Some suspect that when investors and customers fled MF Global last month, the firm used some of the customer money for its own ends, violating Wall Street rules that customers' money be kept separate from the firm's funds. Much of that money may have long since vanished down a rabbit hole.
Investigators must now redouble their efforts to determine exactly what happened during M. F. Global's last frantic days. Investigators previously believed that they were closing in on about $600 million in missing customer funds. Regulators were relying on estimates from the firm and the CME Group, the exchange where MF Global did most of its business.
However, weeks of reconstructing MF Global's books, forensic accountants from Deloitte and Ernst & Young working for the trustee concluded that the account shortfall was much greater than originally estimated. While regulators are expected to raise their estimate above $600 million, it is unlikely to reach the trustee's $1.2 billion figure.
Some authorities chalk up the lower figure to the firm's inept bookkeeping. Regulators slowly discovered additional holes in customer funds over the last three weeks.
Recent inquiries have homed in on the theory that much of the customer money had left the firm. Regulators currently suspect that MF Global previously ran by Jon S. Corzine, the former Democratic governor of New Jersey improperly used customer money for its own purposes in the days before filing for Chapter 11 protection on Oct. 31.
There are two theories currently being entertained by investigators. One is that MF Global used the money to meet trading partners' demands for extra cash, which could come back. The other is that it was used to cover trading losses, which would mean that the money cannot be recovered.
© 2011, Catholic Online. Distributed by NEWS CONSORTIUM.
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Pope Benedict XVI's Prayer Intentions for January 2013
General Intention: The Faith of Christians. That in this Year of Faith Christians may deepen their knowledge of the mystery of Christ and witness joyfully to the gift of faith in him.
Missionary Intention: Middle Eastern Christians. That the Christian communities of the Middle East, often discriminated against, may receive from the Holy Spirit the strength of fidelity and perseverance.
Keywords: MF Global, missing funds, investigation, Jon S. Corzine
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