Futures Magazine examines MF Global’s “Original Sin.”
MF Global was the 8th largest bankruptcy in the history of the United States. Corzine had tried to sell the firm in the waning days but Interactive Brokers smelled a rat and tossed them aside. $1.2 billion is still “unaccounted for,” and no one has even smelled a jail cell.
(From Futures Magazine)
“There had been a number of possible white knights in the days leading up to the bankruptcy. Corzine contacted his old firm Goldman Sachs, which outright rejected the deal. JPMorgan (the largest creditor to MF Global Holdings) reviewed a purchase and decided against it, stating it did not fit their business. But Interactive Brokers (IB) was very interested, and the only one to make a bona fide offer. It had missed an earlier opportunity when Man Financial (which became MF Global) bought the bankrupt Refco in 2005.
With the Sunday night marathon of conference calls among executives, attorneys and regulators buzzing in the background, all were expecting a sale of MF Global Inc. IB’s accountants and lawyers pored through drawers, filing cabinets and computers as part of their final due diligence. Then a shortfall of $633 million in customer funds was discovered (later upped to more than $1.2 billion) and that put an end to the IB offer.
At first, MF Global executives claimed it must be an error, but after a frantic search for the money, they acknowledged it had been transferred out of the firm. With the shortfall confirmed, the clock now was ticking faster, and lawyers and executives hastily moved to complete the bankruptcy preparations.”