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The hunt is on for $600 million missing from MF Global
By Catholic Online (NEWS CONSORTIUM)
November 14th, 2011
Catholic Online (www.catholic.org)
November 14th, 2011
Catholic Online (www.catholic.org)
Brokerage MF Global has gone bankrupt, and most disconcerting about the re-arrangement is an alleged $600 million missing in customer's assets. The Commodity Futures Trading Commission, the Securities and Exchange Commission and the FBI have joined the search for the missing millions.
LOS ANGELES, CA (Catholic Online) - MF Global was headed by former Goldman Sachs CEO and New Jersey Gov. Jon Corzine. Until the loot materializes, everyone's accounts are frozen, and at least one former regulatory professional has expressed suspicion that something is rotten in the state of Denmark."The fact that people today can't tell us where the $600 million went is not a good sign," Lynn Turner, a former SEC chief accountant says. "It's starting to smell like" fraud, he said.
"Bankruptcies of this magnitude inevitably create all sorts of issues," Charles Elson, a specialist in corporate governance at the University of Delaware says, but missing customer assets usually aren't one of them. "I think that's the scary part of the whole thing," he says.
Regulators are investigating into whether MF Global used clients' money to fund its trades -- which is prohibited by law.
Determining that probably isn't going to be as black and white as regulators might like. "They may have been involved in an aggressive interpretation of the securities laws," a securities lawyer who requested anonymity says. "They met the letter of the law - the question is whether they met the spirit of the law."
Describing the process of sifting through the company's finances as a "magical mystery tour" and the company's books as a "disaster," it's a question as complicated as the company's records.
The bankruptcy trustee overseeing the liquidation announced that nearly all 1,066 of the company's employees were losing their jobs, although as many as 200 could stay to oversee the dissolution of the company.
MF Global says the wide confusion in its financials is due to hasty unwinding of positions as its massive bets on European sovereign debt began to collapse, but it has a long history of regulatory violations pertaining to risk and records management.
MF Global was sanctioned half a dozen times and fined a total of $12 million over the past 10 years, including a $10 million fine levied in 2009 for "significant supervision violations" that occurred during the five years prior. One 2008 infraction alone cost $141 million in trading losses on wheat futures.
"They're going to have to figure out what did people know and when did they know it," Elson says. MF Global had undergone a routine audit only days before its bankruptcy filing and nothing was found to be amiss. "Why was this not caught, and if it had been caught, what would have been the consequences?" he says.
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