Regulators Investigating MF Global for Missing Money

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If the malakas in DC, would get some real campaign finance reform in place, the evil behind them wouldn't be a protected class. All candidates should have to use Federal Dollars to run for office. An equal sum to each candidate. No outside money. If these people and corporations and unions can afford to spend so much money on campaigns, they could use same money to lower healthcare premiums for their employees or invest it to create new jobs.

1. None of this has anything to do with MF Global, you're hijacking my thread

2. You cannot and should not wish to institute "No outside money" in the USA. We have this thing called the First Amendment and Protected Speech. It is the right of citizens to petition their government and participate in the political process. A cherished part of that is the ability to financially support the campaigns of candidates they favor. I'm all for having public campaign financing (and used to tick the $3 box on my 1040 return while it was there), but in addition to not instead of private donors.

3. I agree with you - corporate financing of campaigns has entirely warped our political process. It's a cancer that has eaten away at true democracy in America. The SCOTUS decision last year (Citizens United) was a travesty that removed any reasonable limitations on corporate spending on campaigns. The system is broken.

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Hand back the daggum money

WASHINGTON, D.C. ―Nov. 9, 2011― The Futures Industry Association issued the following statement in response to the events involving the bankruptcy of MF Global.

The Futures Industry Association (FIA) is deeply troubled by the failure of MF Global (MFG) and the financial distress that the apparent shortfall in customer segregated funds has caused our members’ customers and the markets generally. Segregation of customer funds is the cornerstone that assures the financial integrity of our markets and any violation of these segregation requirements cannot be tolerated.

Since the appointment of a Trustee for MFG on October 31, FIA member firms have been working closely with all affected stakeholders, including the CME Group, ICE Clear US, ICE Clear Europe and other relevant derivatives clearing organizations, to effect the prompt and orderly transfer of customer positions to other futures commission merchants (FCMs).

FIA supports a full review of the circumstances that led to the failure of MFG and, in particular, the apparent shortfall in customer segregated funds. FIA recognizes that this apparent shortfall will delay the date by which customers will receive all of the funds that were on deposit with MFG. Futures customers cannot afford to have the funds they had deposited to support their positions held up while the claims process runs its course. FIA strongly encourages the Trustee, with the assistance of the Commodity Futures Trading Commission and the clearing organizations, to complete an interim accounting and facilitate the prompt return of all customer funds.

The FIA is the primary industry association for centrally cleared futures and swaps. Its membership includes the world's largest derivatives clearing firms as well as derivatives exchanges from more than 20 countries. For more information, please contact Joanne Morrison (jmorrison@futuresindustry.org) at 202.466.5460 or visit our website at www.futuresindustry.org.

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November 10, 2011

Hon. Martin Glenn

United States Bankruptcy Court

Courtroom 501

One Bowling Green

New York, N.Y. 10004

In re MF Global Inc., Debtor; Case No. 11-2790(MG)SIPA

Dear Judge Glenn:

We are writing to advise the Court of the views of ICE Clear U.S. and ICE Futures U.S. with respect to

the motion filed by certain customers of the Debtor -- MF Global, Inc. -- to permit the release of a

portion of the cash in their trading accounts at MF Global which has been inaccessible to them by

operation of the stay that took effect on October 31, 2011. ICE Clear U.S. is a derivatives clearing

organization which clears all products traded on ICE Futures U.S., a designated contract market that

lists for trading futures and options on agricultural commodities, equity indexes and foreign currencies.

MF Global was one of the largest clearing members of these contracts and over 250,000 contracts for

over 1,500 customer accounts were recently transferred from MF Global customer accounts to other

clearing members by ICE Clear U.S. pursuant to bulk transfers authorized by the Trustee.

Just two days after the stay took effect in this matter, the Court issued an order in response to the

emergency motion of the Trustee, approving a bulk transfer of the open customer contracts and the

minimum level of margin required by the clearing organization in connection with those positions, or an

amount otherwise agreed to with the Trustee. ICE Clear U.S. transferred 100% of the clearing

organization margin requirement to receiving clearing members. This amount represented

approximately half of the segregated deposits that ICE Clear U.S. held for the affected customers.

Subsequent to issuance of the stay and prior to issuance of the bulk transfer order, some portion of MF

Global’s customers with segregated commodity accounts liquidated their open contracts and now hold

only a cash position in their accounts with MF Global. Other customers with segregated commodity

accounts transferred their open contracts to a healthy clearing firm but were not allowed to transfer their

cash balances. Because the customers who already liquidated or transferred prior to the bulk transfers

had no open positions to move, the effect of the bulk transfer order was to preclude these traders from

accessing any of the cash lying idle in their accounts with MF Global. Thus, the bulk transfer order

created an inadvertent preference in favor of those customers who did nothing in response to MF

Global’s financial condition, and operated against those customers who acted quickly and responsibly

to reduce their exposure to MF Global and thereby the exposure of the various clearing organizations of

which MF Global was a clearing member. We believe this result is inequitable and within the power of

the court to redress. Furthermore, if this inequitable approach is left unaddressed by the court, it could

establish an inappropriate standard for future bankruptcy events. Such an inappropriate standard would

create a moral hazard by encouraging customers not to immediately transfer their position or liquidate

to minimize risk (their own risk as well as the risk of both the estate and the clearinghouses) but rather

to “wait and hope.” This could potentially have grave systemic implications.

We therefore urge the Court to immediately permit the release of as much of the cash balance as

possible that remains in the accounts of these liquidating and transferring customers at MF Global, and

to authorize the release of as much of the cash balance as possible from accounts of the customers

who were part of the bulk transfer process.

Respectfully Submitted,

Thomas Hammond

President, ICE Clear U.S.

One North End Avenue

New York, N.Y. 10282

Thomas Farley

President, ICE Futures U.S.

One North End Avenue

New York, N.Y. 10282

CC: Hughes Hubbard & Reed, counsel to Trustee

Commodity Futures Trading Commission

SIPC

Tibbetts Keating & Butler

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MF Trustee Fires Brokerage Staff

The trustee liquidating the broker-dealer business of MF Global Holdings Ltd. on Friday fired the unit's 1,066 employees effective immediately, according to a statement.

Between 150 and 200 staff will be rehired to help with the wind-down process, including the handling of claims on the collapsed firm's estate.

"We've all seen the sand falling through the hourglass, so it's not a surprise," said one MF Global employee reached by phone Friday.

James Giddens, the trustee, aims to vacate MF Global's midtown Manhattan offices as soon as possible and rent out smaller, less expensive office space to handle the liquidation, according to the statement Friday. MF Global's Chicago offices will continue to be leased for a limited time period.

Some employees of MF Global in New York and Chicago already had been let go last Friday. Salaries for those dismissed in the trustee's action Friday will be paid through Nov. 15.

The 1,066 released Friday represent a little more than one-third of the 2,847 staff listed by MF Global as of March 31. The broker-dealer unit isn't being restructured and the termination of employees is a "necessary part" of the liquidation, according to the trustee's statement.

"We are saddened by the trustee's actions today to terminate to many of our colleagues," a spokeswoman for MF Global said in a statement.

WSJ's Aaron Lucchetti has details of the continued search for $600 million in customer funds that went missing after the company collapsed in late October. AP Photo.

The mood in MF Global's New York office was described as grim, as human-resources staffers went from floor to floor to speak to employees. Some complained of suddenness of the announcement, with numerous people learning of the terminations via newswires or television.

Some employees were said to have been let go with no severance and health-care coverage is being continued through the end of November, according to a person familiar with the matter.

Concerns were also raised as to whether the firings would hinder efforts to hunt down an estimated $600 million in MF Global's customer funds that was discovered missing on Oct. 31, the day the firm filed for bankruptcy, according to the person familiar with the matter.

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MF Global: Big Bets Are Still All The Rage On Wall Street

by: Jake Zamansky November 13, 2011 | about: MFGLQ.PK

The macho, bet-the-house-on-red mentality is alive and well on Wall Street. And that’s despite the disastrous meltdown of 2008, which was caused by massive Wall Street bets on derivatives. Those ill-fated gambles nearly destroyed the global capital markets and have put our economy in a hole that it will take years to dig out of.

If you’re skeptical that the gambling spirit is back with a vengeance, all you have to do is look at Jon Corzine and the wreckage of the firm he ran for little more than a year, MF Global (MFGLQ.PK).

Details of the firm’s collapse into bankruptcy are still emerging, but one thing is clear: Mr. Corzine will spend the holidays far away from the casino of Wall Street. Instead, he’ll be huddling with his lawyers in deep discussions about his mismanagement of the bank, his billions in misguided bets on European debt, and the location of $600 million of missing customer funds.

Remember, MF Global was a highly specialized institution. It was designed for a select group of investors, those who used its platform to trade in commodities, futures and derivatives. This is heady stuff, for the smartest guys in the room only.

But that doesn’t make Mr. Corzine-who made his career by betting on Treasuries for Goldman Sachs in the 1990s-a genius. Sure, he was right in the 1990s, and Wall Street guys love to believe that, since they got it right once and got rich, they will get it right always.

A schoolboy could tell Mr. Corzine and his former traders at MF Global that history doesn’t work like that. For all its pretentions to headiness, MF Global, we believe, failed to perform several of the basic tasks required of securities houses. First, MF Global broke the cardinal rule in this industry: It failed to segregate customer funds. Second, it appears that Jon Corzine used the firm’s capital to play his own hunches, placing bets on European bonds and ignoring the advice of other managers and senior executives. Third, MF Global issued a $25 million bond offering in August and it’s already worthless.

While Mr. Corzine repeatedly said he wanted to build the next Goldman Sachs, this all reminds me more of Lehman Brothers.

This mess could wind up with civil and criminal charges against management, including Mr. Corzine, as well as massive lawsuits brought by the firm’s victims- its shareholders, bondholders and employees.

The management at MF Global was scrambling weeks before its collapse. The balance sheet was eroding as the firm’s euro debt trades were rapidly moving against them. They were doing whatever they could to prop up firm as long as they could, but it was like using a spoon to bail out a sinking ocean liner. Senior manager and traders will be held accountable.

The Feds have been AWOL with Lehman Brothers and its executives got off scot-free, so there’s a good chance they will take a very different tack with MF Global. Regulators and law enforcement have to take serious steps to restore confidence in the market.

And Mr. Corzine, please, do us all a favor. In the future stay away from making big bets on the markets. Maybe one of your lawyers can get you a game of Yahtzee for an early Christmas present.

Disclosure: Zamansky & Associates is a New York law firm which represents investors in court and arbitration cases against securities brokerage firms and issuers. The firm may represent investors in cases against companies mentioned in this blog.

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CFTC subpoenas Harris Bank over MF Global: Sources

The U.S. Commodity Futures Trading Commission has served a subpoena on Chicago-based Harris Bank, seeking information about customer accounts at MF Global, two people familiar with the situation told Reuters.

The subpoena is another sign that U.S. regulators are stepping up their investigation into $600 million in missing money from the futures brokerage, which filed for bankruptcy protection on Oct. 31.

Harris Bank, a division of Bank of Montreal, was the main custodian for customer money deposited with MF Global and kept in segregated accounts. The subpoena was served within the past week, according to the people familiar, who were not authorized to discuss the subpoena publicly.

A Harris Bank spokesman had no comment on the investigation. The CFTC also declined to comment.

The CFTC has been joined in the investigation by the Federal Bureau of Investigation and the U.S. Attorney's Office in Manhattan, which has opened a grand jury investigation into the collapse of MF Global and the missing money.