MF Global: Where’s the money?

The MF Global debacle has many interesting angles and has taken on a variety of conspiracy theories, though none really are necessary. At the end of the day, what we are talking about is theft, as National Futures Association President and CEO Dan Roth simply put it.

That leaves us with “who did it, how much was taken, where did it go, will it be returned and when?” And considering we are a full year into this, how much is the bankruptcy process with two separate and competing trustees costing, and who will pay? 

When MF Global failed to sell its brokerage unit, it was thrust into bankruptcy on All Hallows Eve, Oct. 31, 2011. No surprise because we learned in the week preceding that the firm was under great monetary stress and those more intimately in the know had been pulling money out in the preceding months (see “Is there a problem?”). 

The surprise was the “why,” because it was reported that an approximate $700 million shortfall in MF Global customer segregated funds is what killed a potential sale to Interactive Brokers. This brought the specter of possible fraud into the mix and complicated what had been, in the past, a relatively routine procedure of transferring accounts and customer money from a failing firm to a healthy one. 

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