A Big Broker Goes Broke. MF Global Files for Bankruptcy

PistolDave

Corporal
Messages
105
Hurry up... and wait.

If they have already filed for bankruptcy and the government agencies are taking control of the customers assets then I would think that you would be unable to remove any of your funds (if there is any remaining) until the court proceedings have moved well along their course. That could take months.

The funds from all accounts will probably be frozen until the time when they can be sure what is what. I would think that if the funds are held in a segregated account then they will be insured by SIPC and whatever amount you had in your trading/investing account will be covered except for any losses you had on open positions at the time of the insolvency of the firm. That's just my opinion, however.

The part that bothers me most is; "Early this morning, ... reported possible deficiencies in customer futures segregated accounts held at the firm." This could mean that fraud or improper accounting is involved and there will likely be an investigation.

Just from what I have heard so far, I doubt anyone will do anything "quickly" with any of the funds that were in an account with MF Global.

There is one little twist to the story, however. If I'm not mistaken, you don't have this SIPC guarantee of your funds if they are in a forex account, and these funds are not segregated. I suggest reading the account opening documents that you had to sign and see if there is not a clear description of what kind of protection is afforded you if the firm files bankruptcy.

I hope this helps you guys. Keep in mind that I'm a trader just like you and this shows that this kind of thing can happen to anyone. When it comes to forex accounts, I never keep more in one than I can afford to lose (even if the company folds.) I will keep more in a securities and futures account but I"m wondering now if even that is safe.

What the hell is this world coming to?
 
Messages
1
Correction

Hello herbicat,

Hope you’re doing well!

I just wanted to drop a quick note as a point of clarification in this discussion thread.

“FM Global”—as cited in your above post—is a large, private U.S.-based commercial property insurer. We have no ties to the company “MF Global” whatsoever. It would be great if you could make that minor, yet important correction to avoid any confusion.

Thanks so much for your attention in advance and feel free to contact me directly anytime.

Warmest regards,

Jamie J. Pachomski, APR
Senior Public Relations Consultant
Brand Management
FM Global
270 Central Avenue
Johnston, RI 02919-4908, USA
T: +1 (1) 401 415 1895
C: +1 (1) 401 323 7806
F: +1 (1) 401 464 9031
jamie.pachomski@fmglobal.com
 

PistolDave

Corporal
Messages
105
Payouts Begin

MF Global customers to get long-sought $520 million

By Nick Brown and Jonathan Stempel

NEW YORK | Thu Nov 17, 2011 7:43pm EST

(Reuters) - The trustee liquidating MF Global Holdings Ltd's (MFGLQ.PK) broker-dealer unit won court permission to distribute $520 million of cash to customers, providing relief to customers whose accounts have been frozen since the futures brokerage went bankrupt.

MF Global customers to get long-sought $520 million | Reuters
 

herbicat

Private
Messages
11
Corrected typo

Hello herbicat,

Hope you’re doing well!

I just wanted to drop a quick note as a point of clarification in this discussion thread.

“FM Global”—as cited in your above post—is a large, private U.S.-based commercial property insurer. We have no ties to the company “MF Global” whatsoever. It would be great if you could make that minor, yet important correction to avoid any confusion.

Thanks so much for your attention in advance and feel free to contact me directly anytime.

Warmest regards,

Jamie J. Pachomski, APR
Senior Public Relations Consultant
Brand Management
FM Global
270 Central Avenue
Johnston, RI 02919-4908, USA
T: +1 (1) 401 415 1895
C: +1 (1) 401 323 7806
F: +1 (1) 401 464 9031
jamie.pachomski@fmglobal.com
Yes, I had it reversed. I don't want to imply that "FM Global" is related to "Man Financial Inc. or MF Global.
Thanks
 

Ricex

Sergeant
Messages
359
I'll be honest, as soon as I read the news from someone sharing a link from Zero Hedge, I checked my email to see if I had anything from the FPA. I was disappointed to see that I had nothing and I'm even more disappointed to see this being addressed only today.
But even more, that no one here raised alarm bells one month ago, or at least Thursday/Friday 27/28 of October when things were starting to look pear shaped.

It's in times like these that we need the Generals to show up and tell us to pull back with enough time in advance.
In November 2010, MF Global announced its sixth loss in its last seven quarters. In February 2011 the company reported more losses.

.....and that was them trying to make things look good.

If this was your broker I can understand how you must be feeling, I'd be pretty pissed off too, and any faith I had left in my own brokerage has been seriously shaken by all this, but you must have had some idea, things have been looking pear shaped at MF Global for a long time.

If this isn't a big wake up call to all traders to watch their broker like a hawk I don't know what is. Your broker has your money, you need to know the health of that broker and what he's up to everyday.

Throwing punches between the troops isn't cool, and 'due diligence' is a traders first directive, lets concentrate on the enemy.

This is informative: http://www.forexpeacearmy.com/forex-forum/forex-basics-boot-camp/2333-how-select-forex-broker.html
 
Last edited:

PistolDave

Corporal
Messages
105
Be cautious

It seems prudent to only keep the smallest possible amount of funds with ANY forex broker.

Keep the minimum possible in there to cover the required margin plus a little more to cover some drawdown.

When you make a set amount of profit, take some out and put it into a bank. Keep it there in case you need to deposit more.

As your forex account grows, you can keep more in it to trade larger size. However, you should always keep it to the minimum necessary for trading and no more. Keep taking out a percentage regularly if you are making money, to keep it safe. It's not that much trouble to keep moving the funds in and out as needed. It is a lot easier than getting another stake together if the broker folds up.
 

Triantus Shango

Sergeant Major
Messages
1,372
Corzine is probably part of a larger crime network centered around Goldman Sachs. I wonder what he did to NJ as governor and what they would have done to California if they (Goldman Sachs) got Mag Whitman elected governor. Are these criminals at the CME? Is this why SEC laws are not enforced for High Frequency Trading as they run algorithms that "stuff the quote" and other band and unfair trading activities? Notice that Goldman Sachs people often are in high political positions. Is this why America keeps opening up new fronts in its "no exit" wars?

It's time we start asking a lot of questions and demand answers. These criminals threaten our way of life and well being.
you can start by reading this: *****What I have been afraid to blog about: THE ESF AND ITS HISTORY (Part 1-5)***** | Market Skeptics

and everything else for that matter on this site will shock you. like i always say, the world is in the grip of madmen.
 

AsstModerator

FPA Forums and Reviews Admin
Messages
5,575
CFTC Orders MF Global to Pay Back over $1 Billion to Clients

The CFTC has taken some new action against MF Global.

Federal Court in New York Orders MF Global Inc. to Pay over $1 Billion in Restitution to Customers of MF Global Inc.

The court’s Order also imposes a $100 million penalty on MF Global


Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court consent Order against Defendant MF Global Inc. (MF Global) requiring it to pay $1.212 billion in restitution to customers of MF Global to ensure customers recover their losses sustained when MF Global failed in 2011.

The consent Order, entered on November 8, 2013 by U.S. District Court Judge Victor Marrero of the U.S. District Court for the Southern District of New York, also imposes a $100 million civil monetary penalty on MF Global, to be paid after MF Global has fully paid customers and certain other creditors entitled to priority under bankruptcy law. The Trustee for MF Global obtained permission from the bankruptcy court to pay restitution in full to customers to remedy any shortfall with funds of the MF Global general estate.

The consent Order arises out of the CFTC’s complaint, filed on June 27, 2013, charging MF Global and the other Defendants with unlawful use of customer funds (see CFTC Press Release 6626-13, June 27, 2013). In the consent Order, MF Global admits to the allegations pertaining to its liability based on the acts and omissions of its employees as set forth in the consent Order and the Complaint. The CFTC’s litigation continues against the remaining defendants: MF Global Holdings Ltd., Jon S. Corzine, and Edith O’Brien.

Gretchen Lowe, Acting Director of the CFTC’s Division of Enforcement, stated, “Division staff have worked tirelessly to ensure that 100 percent restitution be awarded to satisfy customer losses. The CFTC will continue to ensure that those who violate U.S. commodity laws and regulations designed to protect customer funds will be vigorously prosecuted.”

The CFTC’s Complaint charged MF Global, a registered Futures Commission Merchant (FCM), with violating provisions of the Commodity Exchange Act and CFTC Regulations intended to protect FCM customer funds and requiring diligent supervision by registrants. Specifically, the Complaint charged that during the last week of October 2011, MF Global unlawfully used customer segregated funds to support its own proprietary operations and the operations of its affiliates. In addition to the misuse of customer funds, the Complaint alleged that MF Global (i) unlawfully failed to notify the CFTC immediately when it knew or should have known of the deficiencies in its customer accounts, (ii) made false statements in reports it filed with the CFTC that failed to show the deficits in the customer accounts, (iii) used customer funds for impermissible investments in securities that were not considered readily marketable or highly liquid in violation of CFTC regulation, and (iv) failed to diligently supervise the handling of commodity interest accounts carried by MF Global and the activities of its partners, officers, employees, and agents.

The CFTC appreciates the assistance of the U.S. Attorneys’ Offices for the Southern District of New York and the Northern District of Illinois, the Federal Bureau of Investigation, the Securities and Exchange Commission, and the Financial Conduct Authority in the United Kingdom.

The consent Order recognizes the cooperation of the Trustee for MF Global and requires the Trustee’s continued cooperation with the CFTC.

CFTC Division of Enforcement staff members responsible for this case are Sheila Marhamati, David W. Oakland, Chad Silverman, K. Brent Tomer, Douglas K. Yatter, Steven Ringer, Lenel Hickson, and Manal Sultan. Staff from the CFTC’s Division of Swap Dealer and Intermediary Oversight, Division of Clearing and Risk, and Office of Data and Technology also assisted in this matter.
Original CFTC Press Release
 

AsstModerator

FPA Forums and Reviews Admin
Messages
5,575
It took a few months to get the money moving. A billion dollars is now on its way back to the rightful owners of the money.

April 3, 2014

Customers of MF Global Inc. to Begin Receiving Final Restitution Payments from MF Global to Satisfy More Than $1 Billion in Customer Losses as Ordered by Federal Court in CFTC Action

Company also remains subject to a $100 million CFTC penalty

Washington, DC – Pursuant to a federal court consent Order obtained by the U.S. Commodity Futures Trading Commission (CFTC) against MF Global Inc. (MF Global), the Trustee for MF Global has announced that the company will now begin making final distributions to its customers to satisfy its obligation of full restitution for $1.212 billion in losses sustained by customers of MF Global when the company failed in 2011.

The consent Order, entered on November 8, 2013 by Judge Victor Marrero of the U.S. District Court for the Southern District of New York (CFTC Press Release 6776-13, November 18, 2013), required MF Global to begin making final restitution payments after obtaining permission from the bankruptcy court to remedy any shortfall with funds of the MF Global general estate. Following an unsuccessful appeal by parties to related litigation, the bankruptcy court’s order allocating estate funds to satisfy customer claims has now become effective.

In addition to full restitution, the consent Order imposed a $100 million civil monetary penalty on MF Global, to be paid after MF Global has fully paid customers and certain other creditors entitled to priority under bankruptcy law.

Gretchen Lowe, Acting Director of the CFTC’s Division of Enforcement, stated, “Throughout the Division’s investigation and ongoing litigation, ensuring full restitution to customers has been a primary focus. I am pleased that the terms of the consent Order are now being fulfilled and that these final restitution payments will satisfy the remaining shortfall. The CFTC will continue to ensure that those who violate U.S. commodity laws and regulations designed to protect customer funds will be held accountable.”

The consent Order arose out of the CFTC’s complaint, filed on June 27, 2013, charging MF Global and the other Defendants with unlawful use of customer funds (see CFTC Press Release 6626-13, June 27, 2013). In the consent Order, MF Global admitted to the allegations pertaining to its liability based on the acts and omissions of its employees as set forth in the consent Order and the Complaint.

The CFTC’s Complaint charged MF Global, a registered Futures Commission Merchant (FCM), with violating provisions of the Commodity Exchange Act and CFTC Regulations intended to protect FCM customer funds and requiring diligent supervision by registrants. Specifically, the Complaint charged that during the last week of October 2011, MF Global unlawfully used customer segregated funds to support its own proprietary operations and the operations of its affiliates. In addition to the misuse of customer funds, the Complaint alleged that MF Global (i) unlawfully failed to notify the CFTC immediately when it knew or should have known of the deficiencies in its customer accounts, (ii) made false statements in reports it filed with the CFTC that failed to show the deficits in the customer accounts, (iii) used customer funds for impermissible investments in securities that were not considered readily marketable or highly liquid in violation of CFTC regulations, and (iv) failed to diligently supervise the handling of commodity interest accounts carried by MF Global and the activities of its partners, officers, employees, and agents.

The CFTC’s litigation continues against the remaining Defendants: MF Global Holdings Ltd., Jon S. Corzine, and Edith O’Brien.

The CFTC appreciates the assistance of the U.S. Attorneys’ Offices for the Southern District of New York and the Northern District of Illinois, the Federal Bureau of Investigation, the Securities and Exchange Commission, and the Financial Conduct Authority in the United Kingdom.

The consent Order recognized the cooperation of the Trustee for MF Global and requires the Trustee’s continued cooperation with the CFTC.

CFTC Division of Enforcement staff members responsible for this case are Sheila Marhamati, David W. Oakland, Chad Silverman, K. Brent Tomer, Douglas K. Yatter, Steven Ringer, Lenel Hickson, and Manal Sultan. Staff from the CFTC’s Division of Swap Dealer and Intermediary Oversight, Division of Clearing and Risk, and Office of Data and Technology also assisted in this matter.
Original CFTC Press Release


I like the part about the CFTC penalty only being paid after customers get all of their money.
 
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