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Archive for the ‘MF Global’ Category

MF Global – Missing Fund Estimate Doubles According to Trustee

The trustee overseeing the wind-down of MF Global’s brokerage said more than $1.2 billion in customer funds could be missing from the failed firm, more than double the original estimate of missing cash.

Trustee James W. Giddens also said in a statement Monday that returning 60% of funds to the firm’s former customers—a previously stated goal—will require $1.3 billion to $1.6 billion. Those figures represent “virtually all of the assets under the trustee’s control.”

The current estimate of $1.2 billion in missing funds represents funds that should have been segregated in stand-alone customer accounts by MF Global in accordance with regulations, the trustee said. However, Mr. Giddens cautioned that “these are preliminary numbers that may well change.”

MF Global — Search for missing money continues

Three weeks after $600 million in customer money went missing from MF Global, the search for the cash has been hampered by the bankrupt brokerage firm’s sloppy record-keeping, an increasingly worrisome situation that has left regulators frustrated and customers in the lurch.

The round-the-clock effort consumes federal regulators and criminal investigators, with lawyers sleeping at open desks and each agency commandeering a different conference room at the firm’s offices. But as authorities comb through some 38,000 customer accounts, they are growing more suspicious about what went wrong at MF Global, the commodities powerhouse once run by Jon S. Corzine, the former Democratic governor of New Jersey.

At a bankruptcy hearing on Wednesday the trustee overseeing the liquidation of the brokerage house would not speculate on the matter, acknowledging that the money was still missing.

After MF Global filed for bankruptcy in late October, hundreds of examiners descended on the firm’s New York and Chicago offices. Since then, they have been poring over records, verifying customer accounts and interrogating the skeleton staff that remains.


MF Global Customers to get some relief

The trustee liquidating MF Global Holdings Ltd’s broker-dealer unit won court permission to distribute $520 million of cash, providing relief to customers whose accounts have been frozen since the brokerage went bankrupt.

U.S. Bankruptcy Judge Martin Glenn approved the payout at a hearing on Thursday in Manhattan.   The payout is 60 percent of the $869 million that was frozen since Oct. 31 across commodity customer accounts that contained only cash, the trustee James Giddens has said.

MF Global to receive subpoenas

Federal prosecutors in Chicago and New York have issued subpoenas in the probe of the collapse of MF Global Holdings Ltd., people familiar with the case said, a sign of an intensifying Justice Department criminal investigation as authorities try to track down about $600 million in client funds.

Chicago U.S. Attorney Patrick Fitzgerald and New York U.S. Attorney Preet Bharara, regarded as two of most aggressive and high-profile federal prosecutors in the country, are using subpoenas to gather company records, the people familiar with the matter said.

The Justice Department and the FBI are conducting a criminal investigation of MF Global’s collapse. Other federal regulators also are investigating.

More than 1,000 MF Global employees fired

Some 1,066 employees of bankrupt broker and dealer MF Global Inc. have been fired, according to a statement issued Friday by James Giddens, the court-appointed trustee for the liquidation of the company. Between 150 and 200 former employees are being hired to assist in the wind down of the business and processing of bankruptcy claims, Giddens said. MF Global is not conducting business, and will not be reorganized. About 17,000 customer account positions and approximately $1.5 billion in customer account funds have been transferred to other future commodities merchants.

MF Global account transfer delayed

Former MF Global Ltd. clients face a further delay in securing their funds and collateral after CME Group Inc. said it had frozen access them until after the close of business on Nov. 8.  The Chicago-based exchange operator oversaw the mass transfer of client accounts from the failed brokerage to new clearing partners, a process that was due to have been completed on Nov. 4.  But in a client notice late Sunday, CME said it was checking whether the correct amount of collateral was allocated to each of the customers involved in the bulk transfer of positions.

CME said in a client notice it had directed the firms that had taken over the MF Global business to delay distributing the transferred collateral and funds from liquidated positions until the review had been completed. The company didn’t expand in the notice as to whether any mistakes had been made in the original calculation.  The delay is the latest hitch in the transfer of thousands of client accounts hit by MF Global’s bankruptcy filing.

MF pushed back against regulation that may have saved the firm

Months before MF Global teetered on the brink, federal regulators were seeking to rein in the types of risky trades that contributed to the firm’s collapse. But they faced opposition from an influential opponent: Jon S. Corzine, the head of the then little-known brokerage firm.

As a former United States senator and a former governor of New Jersey, as well as the leader of Goldman Sachs in the 1990s, Mr. Corzine carried significant weight in the worlds of Washington and Wall Street. While other financial firms employed teams of lobbyists to fight the new regulation, MF Global’s chief executive in meetings over the last year personally pressed regulators to halt their plans.

The agency proposing the rule, the Commodity Futures Trading Commission, relented. Wall Street, which has been working to curb many financial regulations, won another battle.

The proposed rule would have restricted a complicated transaction that allowed MF Global in essence to borrow money from its own customers. Brokerage firms are allowed to use customers’ money to earn interest, not unlike banks, but this rule would have outlawed using customer funds for a loan to the firm itself.

Morgan Keegan sale update

Buyout firms circling Regions Morgan Keegan brokerage unit lowered bids by at least $200 million after financing markets deteriorated and MF Global Holdings Ltd. filed for bankruptcy, according to people with direct knowledge of the process.

Thomas H. Lee Partners LP and Jeffrey Greenberg’s Aquiline Capital Partners LLC submitted the highest offer at about $750 million, the people said, asking not to be named because the talks are private. The group topped a joint bid from Carlyle Group LP and Blackstone Group LP, according to the people, who said previous offers valued the unit at more than $1 billion.

A deal hasn’t been reached and talks could fall apart as Regions is pushing both groups to raise their price, the people said. Regions, based in Birmingham, Alabama has been planning to use proceeds from the sale to boost capital and pay back a $3.5 billion U.S. bailout. Regions has indicated it plans to collect a $250 million dividend from Morgan Keegan prior to any sale, increasing proceeds from the business, the people said.

MF Global Senior Notes

Investors who purchased MF Global 6.250% Senior Notes due 2016 offered for sale in August of 2011 may wish to seek counsel to understand more about their potential rights.  

The note offering consisted of $325 million in aggregate principal amount of 6.250% Senior Notes due 2016. Jefferies served as the sole book-running manager for the offering, with BofA Merrill Lynch, BMO Capital Markets, Lebenthal & Co., Commerzbank, Sandler O’Neill + Partners, Natixis and US Bancorp serving as co-managers of the offering.  The underwriters of a securities offering have an obligation to conduct adequate due diligence of the issuer during the underwriting process.

MF Global – $600 million missing

A government regulator said in court Wednesday that roughly $600 million is missing from the books of bankrupt brokerage MF Global.

“MF Global has discovered a shortfall of segregated accounts of around $600 million,” a lawyer with the Commodity Futures Trading Commission said, adding that this is a preliminary figure that could increase.

The FBI and federal prosecutors are now attempting to investigate how some $600 million of MF Global customers’ money went missing.  In court on Wednesday, a motion by James Giddens, the trustee for MF Global’s liquidation, was approved, allowing for the partial transfer of 50,000 commodity accounts at the firm to other brokerages in order to prevent liquidations. The transfers will unfreeze commodity positions with a notional value of $100 billion, the trustee said in a press release Wednesday.

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