$1.2 Billion of MF Global Inc.’s Clients Money Still Missing

According to the Commodity Futures Trading Commission, the whereabouts of $1.2M in MF Global Inc. customer funds are still unknown. Lawmakers at a Senate Banking Committee meeting grilled the CFTC officials earlier this week.

Speaking before the panel on Tuesday, CFTC Commissioner Jill Sommers said that the agency still has yet to find all the money. The CFTC began its investigation into MF Global’s collapse after holding company MF Global Holding filed its Chapter 11 bankruptcy petition on October 31. Sommers reported that there are dozens of CFTC staffers working on finding the missing funds.

Meantime, former MF Global head Jon Corzine has said that he, too, doesn’t know where the money went. He issued an apology to employees, customers, and investors who have had to deal with the fallout from brokerage firm’s collapse. Since MF Global announced it was seeking bankruptcy protections, thousands of clients have seen their assets frozen.

One suspicion is that MF Global used clients’ money to make significant investments in European sovereign debt. In remarks that were prepared for a U.S. House of Representatives Agriculture Committee last week, CME Group Inc. Executive Chairman Terrence Duffy accused MF Global of misusing hundreds of millions of dollars in client funds and moving the cash to broker-dealer’s own accounts. Duffy noted that this is a violation of the Commodity Exchange Act. CME was an MF Global regulator. The futures exchange operator claims that during a phone call the brokerage firm admitted to making these transfers.

CFTC Chairman Gary Gensler has recused himself from the probe into MF Global. He sees his business ties to Corzine as a conflict. Corzine was the chairman of The Goldman Sachs Group Inc. when Gensler worked there.

However, CFTC ethics officials, who are aware of their connection, don’t see this as a problem. At the Senate Banking Committee hearing on Tuesday, Republicans accused Gensler of shirking his duties.

When MF Global sought Chapter 11 bankruptcy protection, the firm left behind over $2 billion in debt. JP Morgan Chase, with over $1.2 billion in corporate bonds, and Deutsche Bank, with $1 billion in bonds, are two of its larger unsecured creditors.

Our stockbroker fraud lawyers at Shepherd Smith Edwards & Kantas, LLP are investigating MF Global Holdings LTD. If you were an MF Global customer who believes you may have a securities claim, we want to hear from you. This is not the type of case you want to pursue without an experienced securities fraud law firm representing you.

Unfortunately, investors do lose money because of broker misconduct. There is no reason why you should have to suffer because of other people’s negligence and mistakes.

Regulators: $1.2B of MF clients’ money still missing, Investment News, December 6, 2011
Corzine sorry, puzzled by missing MF Global money, Reuters, December 8, 2011
MF Global files for bankruptcy protection, CNN Money, October 31, 2011

More Blog Posts:

MF Global Shortfall May Be More than $1.2B, Says Trustee, Stockbroker Fraud Blog, November 26, 2011
MF Global Holdings Ltd. Files for Bankruptcy While Its Broker Faces Liquidation and Securities Lawsuit by SIPC, Institutional Investor Securities Blog, October 31, 2011
SEC’s Office of the Whistleblower Received 334 Tips During FY 2011, Stockbroker Fraud Blog, December 8, 2011