The "MF" in MF Global Ltd. may not have really stood for "malfunction," but one year after the brokerage firm succumbed to trading losses and customer defections by entering bankruptcy protection, it's clear the story of the company's demise was multifaceted.
Piperlime store opening, New York City
Most immediately, former MF Global chief executive Jon Corzine's decision to use the firm's own capital to buy the spurned debt of some peripheral European countries generated losses, drew credit-agency downgrades and spooked trading clients, many of whom withdrew their funds before the bankruptcy, which stranded $1.6 billion in customer money within MF.
Financial controls also appear to have been lacking for years before MF's undoing, according to retrospective accounts, with the broker's accountants unable to get a firm handle on its cash balances in a timely way.
Civil action against MF Global, charging that the firm mislead investors about the risky bets it was making with European debt, is going forward as of now, despiteRead More »from MF Global’s Collapse: The Fed’s Role