The embattled securities firm MF Global moved millions of US dollars in missing client funds last week and tried to avoid detection as the company slid toward bankruptcy, a regulator said on Wednesday.
MF Global, which filed for bankruptcy protection on Monday, is the eighth-biggest US bankruptcy and the first major Wall Street firm to fail because of bets on European debt.
MF apparently made “substantial transfers” of customer money after an on-site audit last week, said the regulator, CME Group Inc. CME is a private company that oversees firms such as MF Global on behalf of US regulators.
The money was moved in a way that “may have been designed to avoid detection,” CME said in a statement.
MF Global’s failure is the latest public setback for Jon Corzine, who was head of Goldman Sachs and governor of New Jersey before joining the company. He had hoped to build MF Global from a brokerage into an investment bank.
CME’s statement suggests that MF Global executives rushed hundreds of millions of dollars out of client accounts as bankruptcy loomed. The company acknowledged that the money was missing early on Monday morning.
About US$600 million of client cash is still missing, two officials with knowledge of the probe said. The FBI is expected to investigate whether the firm’s actions violated criminal laws according to two other people
US regulators started raising concerns about MF Global’s European sovereign debt exposure as early as June, a source familiar with the matter said, four months before the company’s collapse.
While the event hit volumes in the commodities market earlier in the week, bankruptcy court proceedings on Wednesday offered hope that customers would be able to trade again by the end of the week as their positions and much of their collateral were transferred to other brokers.
As for the broader economic implications, US Federal Reserve Chairman Ben Bernanke said they are limited.
“It appears to be an idiosyncratic case,” Bernanke told reporters. “We are monitoring the possible impacts on funding markets and elsewhere and so far we have not seen any significant impact on financial stability.”
However, the meltdown of Corzine’s firm should spark reforms to separate retail from investment banking operations, “Bond King” Bill Gross said.
The bankruptcy was another example of how Wall Street has “lost its way,” he added.
“Do we have a better example today than MF Global in terms of the mingling of those two particular aspects of capital allocation?” Gross, who runs the US$242.2 billion PIMCO Total Return portfolio, said at a Charles Schwab Corp conference in San Francisco.
“So the closer we get back to separating the two, I suppose the better from the standpoint of reform,” he said.
To many, Tatu City on the outskirts of Nairobi looks like a success. The first city entirely built by a private company to be operational in east Africa, with about 25,000 people living and working there, it accounts for about two-thirds of all foreign investment in Kenya. Its low-tax status has attracted more than 100 businesses including Heineken, coffee brand Dormans, and the biggest call-center and cold-chain transport firms in the region. However, to some local politicians, Tatu City has looked more like a target for extortion. A parade of governors have demanded land worth millions of dollars in exchange
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue jumped 48 percent last month, underscoring how electronics firms scrambled to acquire essential components before global tariffs took effect. The main chipmaker for Apple Inc and Nvidia Corp reported monthly sales of NT$349.6 billion (US$11.6 billion). That compares with the average analysts’ estimate for a 38 percent rise in second-quarter revenue. US President Donald Trump’s trade war is prompting economists to retool GDP forecasts worldwide, casting doubt over the outlook for everything from iPhone demand to computing and datacenter construction. However, TSMC — a barometer for global tech spending given its central role in the
An Indonesian animated movie is smashing regional box office records and could be set for wider success as it prepares to open beyond the Southeast Asian archipelago’s silver screens. Jumbo — a film based on the adventures of main character, Don, a large orphaned Indonesian boy facing bullying at school — last month became the highest-grossing Southeast Asian animated film, raking in more than US$8 million. Released at the end of March to coincide with the Eid holidays after the Islamic fasting month of Ramadan, the movie has hit 8 million ticket sales, the third-highest in Indonesian cinema history, Film
RSS