MF Global is bankrupt. And for whatever reason, the trading firm is missing more than $600 million. The Securities and Exchange Commission is now said to be probing into the situation, and is looking into whether or not Jon Corzine misled investors.
Corzine headed the now-defunct brokerage firm. He is the former governor of New Jersey and ex-CEO of Goldman Sachs. The firm filed for bankruptcy on Monday.
The bankruptcy is recent news, but the firm faced increasing scrutiny from regulators the past few months.
In June, the Financial Industry Regulatory Authority became concerned. They believed that MF Global needed more capital to hold against their positions in European sovereign debt, reports Reuters.
MF Global did inject more capital after FINRA's inquiry. Apparently, it wasn't enough to save the firm.
Due to its accounting, MF Global may have frontloaded their earnings. This may have meant that though the business was struggling, it looked fine on paper. This could be a dangerous combination.
Even more disturbing is the news that they are missing more than $600 million dollars. And they're not sure where it went. Did they use the money for other purposes? The absent money is supposed to be in their customer funds. This should have been kept separate. This makes the money's disappearance even more puzzling.
The U.S. Commodity Futures Trading Commission has not decided if they will investigate.
This is certainly worrisome news. Wall Street, as it seems, is no longer the prosperous landscape it used to be.
Expect MF Global's bankruptcy - and allegations that Jon Corzine misled investors - will just turn into more fodder for Occupy Wall Street protesters nationwide.
- MF Global Has Shortfall of $633 Million, CFTC Says (San Francisco Chronicle)
- Borders Bankruptcy: Meet the Lawyers Handling the Case (FindLaw's In House)
- Before Filing for Bankruptcy, Pay Your In House $100K (FindLaw's In House)