Regulators have discovered MF Global Holdings Ltd. shifted hundreds of millions of dollars of customer funds to its own brokerage accounts days before its bankruptcy filing on Oct. 31, the Wall Street Journal reported, citing people familiar with the matter.
It's not clear whether the apparent use of customer money occurred intentionally, but about $600 million is still missing and might never be recovered, the report said.
A judge on Thursday approved the transfer of $520 million in customers' cash-only accounts at MF Global.
The transfer will start in about a week and represents about 60% of the $869 million held in the accounts.
The rest is being retained to cover any possible shortfalls, the report added.
Pick the odd one out of the following 7 banks, while in the process pointing out what they have in common:
- Bank of America Corp
- Citigroup Inc
- Deutsche Bank AG
- Goldman Sachs Group Inc
- Jefferies Group Inc
- JPMorgan Chase & Co
- Royal Bank of Scotland Group Plc
As it so happens 6 of the 7 are Bank Holding Companies, and have access to the Fed’s various emergency facilities.
All six were sued by pension funds “who said the bonds’ offering prospectuses concealed problems that led to the futures brokerage’s collapse.”
Every single entity that was impaired in part or in whole as a result of the MF Global bankruptcy will follow suit and sue the same 7 banks… of which only Jefferies does not have the benefit of an infinite backstop.
According to the complaint, the registration statements and prospectuses for about $900 million of MF Global note offerings this year omitted how the company was using high leverage, investing heavily in risky European sovereign debt, and not properly segregating client assets from its own.
It said the seven banks helped draft the offering documents and sell the notes, collecting $21.2 million of fees, but that their “failure to conduct an adequate due diligence investigation was a substantial factor” in MF Global’s collapse, as well as in defaults on the notes.
The lawsuit was brought by the IBEW Local 90 Pension Fund in Connecticut, and the Plumbers’ and Pipefitters’ Local #562 Pension Fund in Missouri, and seeks class-action status.
And to everyone who may have lost money or had their capital locked up indefinitely by the bankrupt firm, which we are 100% certain will see all of its valuable assets picked off by Goldman Sachs and JP Morgan.
MF Global Holdings Ltd.'s Australian unit has received no offers for the business and will be closed over the course of the coming months, according to administrators.
In a notice to clients, Joint Administrator Chris Campbell said the Australian Securities Exchange has advised that after closing out client positions, the balance of client funds is about 34 million Australian dollars (US$33.9 million), versus A$36 million at the time of his appointment.
The trustee overseeing the wind-down of MF Global Holdings Ltd.'s brokerage said more than $1.2 billion in customer funds could be missing from the failed firm, more than double the original estimate of missing cash.
Trustee James W. Giddens also said in a statement Monday that he does not have access to funds beyond $1.6 billion already on hand and is "very close to exhausting the funds under his control."
Giddens said restoring customer accounts to 60% of their value--a previously announced goal--would require as much as $1.6 billion.
That next step still requires approval of the bankruptcy court and should occur in early December, Giddens said.
Regulators had previously said that approximately $600 million of funds in segregated accounts owned by former MF Global customers was unaccounted for at the time of the firm's bankruptcy filing on Oct. 31.
Giddens also said efforts to collect other funds from U.S. depositories is continuing "around the clock," but the recovery is complicated by assets located in foreign depositories.
You cannot post new topics in this forum You cannot reply to topics in this forum You cannot edit your posts in this forum You cannot delete your posts in this forum You cannot vote in polls in this forum