Monday, June 4, 2012

MF Global Lied to its CME Regulator About Customer Fund Segregation

Following up on "MF Global Trustee May Bring Corzine Negligence Claims".
From the Wall Street Journal:

Feds Eye MF's False Promise 
Firm Assured CME of a $200 Million Cushion After Concerns Raised Internally
Federal investigators are scrutinizing a series of conversations among MF Global Holdings Ltd. employees shortly before the securities firm erroneously told regulators that its customer funds were safe, said people with knowledge of the probe.

Three days before MF Global filed for bankruptcy-court protection, CME Group Inc. CME +1.46% was assured by the New York company of a $200 million cushion in accounts that ensured customer funds were being kept separate from the firm's own money.

But the customer accounts actually were in the red, and the deficit ballooned to more than $900 million on the night of Oct. 30. MF Global tumbled into Chapter 11 on Oct. 31. The bankruptcy trustee trying to recover money for the firm's U.S. customers has estimated that the shortfall now is roughly $1.6 billion. A large chunk of the money is stuck outside the U.S....MUCH MORE