Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : The Obama - Clinton Disaster -- Ignore unavailable to you. Want to Upgrade?

To: DuckTapeSunroof who wrote (60402)	11/17/2011 8:41:31 PM
From: Hope Praytochange	Read Replies (1) \| Respond to of 103300

MF Global Is Said to Have Used Customer Cash ImproperlyBY BEN PROTESS AND AZAM AHMED In the last days before MF Global’s collapse, the firm was borrowing cash from its customers without backing the loans, a serious violation of Wall Street rules that regulators believe contributed to $600 million of missing money, say people briefed on the investigation into the collapse. Investigators have now zeroed in on the suspect borrowing at the commodities and derivatives brokerage firm, which at the time of its collapse was run by Jon S. Corzine, these people said. At least some of the borrowed customer cash was used to pay off bad bets made by MF Global, regulators suspect, meaning the money is not simply missing. It is gone. Article Tools E-mail Print 43 CommentsRecommendShareTUMBLRDIGGLINKEDINREDDITPERMALINKTwitter MF Global, like other brokers, can borrow customer cash if it puts up sufficient collateral. But MF Global did not provide enough backing in late October, essentially taking free loans, said the people, who spoke on condition of anonymity because the investigation is ongoing. As customers rushed to withdraw money with the firm teetering on the brink of bankruptcy, that practice exacerbated a liquidity crisis at the firm, these people said. It is unclear what MF Global did with this money or whether it can be recovered. Investigators are checking whether MF Global used some of the cash to pay off its own debts, which means the money could be sitting in an account at another firm. But if the firm used it to cover losses on some of its risky bets, the money may be gone forever. Still, some of the $600 million may yet trickle in. As a patchwork of federal agencies and the trustee overseeing the firm’s liquidation reconstruct the MF Global’s books, they expect to find that in the chaotic last days the firm failed to record when some customers received their money. The search for the missing money has gripped the attention of both Washington and Wall Street. As hundreds of examiners pore over records and interview former employees, brief moments of hope have emerged only to later be proved false. A spokesman for MF Global declined to comment. A spokesman for the Commodity Futures Trading Commissions, which is leading the investigation, also declined to comment. A lawyer for MF Global, Marc Kasowitz, said the company and its employees are cooperating with regulators as well as the trustee. “Any characterization at this point of what occurred at MF Global is premature and inappropriate,” Mr. Kasowitz said in a statement.