My latest blog, The MF Global Collapse Explained (and Why It Is a Crime), is available on FredSauerMatrix. To read it click here.
In my latest article, I take a thorough and detailed look at the real story behind the MF Global bankruptcy, and how the actions of its executives and board members resulted in the depositors losing billions of their own hard-earned money.
On Monday October 31, 2011, MF Global filed for Chapter 11 bankruptcy listing $39.7 billion in debt and $41 billion in assets in its bankruptcy filing, and only $26 million in cash. With at least $1.2 billion “missing” from customers’ accounts, the blame game for who was responsible for such a massive failure has begun.
MF Global failed to make a profit in over four years, but its plunge into bankruptcy was precipitated by former CEO John Corzine’s decision shortly after his arrival in March of 2010 “to change MF Global from a midsize derivatives broker to full-fledged investment bank that took risks with its own capital.” These risks included diving head first into the Italian and Spanish bond markets shortly before they plunged into chaos following concerns by investors over the growing European debt crisis.
But the lack of oversight and action by the regulatory entities charged with protecting MF Global’s customers, the Chicago Mercantile Exchange and Commodity Futures Trading Commission, brings to light many questions about whether John Corzine’s close connections and relationships with people at both entities, and his connections to the Federal Reserve which helped bailout MF Global’s balance sheets, put MF Global’s customers in a position of unnecessary risk. What’s clear is regulators turned a blind eye at the very corporate malfeasance that could have saved MF Global’s customers. Insightful calculations demonstrate how outrageous the risks were.