Breaking: MF Global, Greed and Missing Client Funds

According to its website, MF Global is

“a broker-dealer dedicated to helping clients discover and capitalize on market opportunities. We deliver trading and hedging solutions across all assets in markets around the world. MF Global is a leading broker of commodities and listed derivatives and one of 22 primary dealers authorized to trade U.S. government securities.”

But according to federal regulators, MF Global may not have ‘helped” its clients at all…rather, it has possibly gambled their clients funds away in yet another example of reckless activity by Wall Street financiers. By law, customers’ funds must be kept separate from company funds; it is suspected that this ‘firewall’ was breached by MF Global traders. As of this writing, $700 million in customer funds can not be accounted for. The commodities & derivatives trading firm is run by Jon S. Corzine, the former Governor of New Jersey and a former Goldman Sachs Executive.

Corzine was characterized at Goldman Sachs by his toleration of losses in trades, according to the book “Goldman Sachs: The Culture of Success,” by Lisa Endlich. Once at MF Global, Corzine bought huge debt holdings from Spain, Italy, Portugal, Ireland, and Belgium, all countries with significant fiscal problems...an approach that caused Forbes Inc Magazine Bob Lenzner to remark,

"This is called going against the grain with a vengeance. Stupid– and a tad grandiose."

As a result of those risky purchases (to the tune of $6.3 billion), MF Global reported a $191.6 million quarterly loss on Tuesday. Moody’s and Fitch then dropped MF Global’s rating to “junk” status last week, and the firm lost 2/3 of its market value. As the company’s reputation unraveled, MF Global sought a larger firm to buy it, negotiating through Black Rock Financial. Barclays, Citigroup, JP Morgan Chase, and Wells Fargo, all banks which have bought bad debt and then traded it for taxpayer-funded bailouts, wee all approached. On Saturday, it was thought that Jeffries & Company might buy MF Global; on Sunday, Interactive Brokers was rumored. But late on Sunday night, Interactive discovered that customer money was missing, ending the deal and setting of alarms among regulators. The Federal Reserve Bank of New York cut the firm off from borrowing.

Just a few hours ago, MF Global filed for bankruptcy protection.

Another example of American’s pensions gambled away in reckless greed. Another day of Occupy Wall Street citizens jailed for exercising Constitutional Rights…and another day of Wall Street banksters walking free.