The real question is why is that money not being used to cover the $1.2 billion customer short fall? Or more appropriately, why is the Trustee not making an immediate and aggressive claim for those funds?
A initial distribution has been approved http://www.reuters.com/article/2011/12/09/us-mfglobal-trustee-idUSTRE7B725W20111209
For sanity's sake, it's worth reading a portion of CME's arguments in favor of the motion that resulted in this "true up" distribution of ~ 2.1 Billion. See document #670 from the trustee's docket found at the following link: http://dm.epiq11.com/MFG/docket/Default.aspx?rc=1 It seems also clear in CME's arguments that the trustee is aware that excess segregated customer funds in the custody of MF Global overseas affiliates. Seems like the longer this drag on the worse the books look. The need for a 550 million guarantee seems as much grandstanding on the part of the trustee, or perhaps its a precursor to the outsized claims that may follow on during this liquidation. I guess the ROR on financial litigation beats the heck out of chasing ambulances for a living provided a firm has the resources and stature to be a credible participant.
of the two addons you inserted,the 3 rd paragraph in the first addon says "all property that was unlawfully converted",are they talking about A, mf global using customer monies to trade or B the bankruptcty defining the remaining money as mf g's ,not customers,if it's A then they are saying other firms cannot legally do it either
Just to clarify, for this 72% equalising distribution, is it ONLY usd cash that is being distributed? What about foreign currency deposits? Do they count as cash held at foreign exchanges?
Sorry about the slow reply. Paragraph 3 is actually a footnote within the brief filed. It quotes from CFR' on CEA brokerage bankruptcy. As far as I can tell the point of this brief is to establish / reference support for the idea that a shortfall in customer funds would give customers first claim to assets of the parent holding company undergoing bankruptcy. This brief attempts to refute the idea that creditors of the parent holding company have any rights to funds that may have been transferred from customer accounts legally or otherwise (?). The central issue seems to lie with the forensic accounting. Reading more news over the weekend some money may have been transferred sooner than thought. What is really interesting is that the CME audit during the last week came up good. So someone was pretty good at flying the kite that week. As to the 72% distribution, to my knowledge it's all US held assets. Bringing back $ from foreign affiliates has not occurred as of yet. This would seem like an easy thing to accomplish, but so far no luck. Not sure why firms are reluctant to return surplus funds. Perhaps the freeze up in the Eurodollar markets have something to do with this situation. My take on your question is that it depends on where those funds were kept. If they were in US banks they should be available. I suspect (but have no idea for sure) that non$ assets are pretty much held overseas in affiliates. These balances look sound based on what I've read. The challenge of getting these returned should be straight forward were it not for the actions of lawyers in the legal system.
NYT sure did a hatchet job on Corzine. Refreshing to read about good old fashion out of control speculation in this era of HFT and other boring trading strategies. http://www.cnbc.com/id/45637611
I wish these articles would stop focussing on his ability (or lack thereof) as a trader. His views on the market are totally irrelevant. The fact that money was missing from customer accounts potentially makes him a CRIMINAL.
So true, as CEO of what was primarily a retail firm his first obligation should have been to customers not about building a mini Goldman. If there were flaws in the revenue structure, fix them the right way, through proper accounting. These kind of horse shit stories create sympathy where there should be outrage at the gross malfeasance that took place. This situation clearly shows that no lessons were learned from the debacle of 06 - 09. MF probably won't be the last brokerage to blow up if things wash out in Europe. The story of JC and the mess he was steward over at MF is nothing to write home about or to brag about in the press. JC's testimony so clashes with insider accounts of his corporate persona that he's totally discredited himself in public. Trading 101 - Cut you losses. Holding a leveraged bond bet with all the sharpies waiting daily for Europe to implode. Vulnerabilities poorly hidden by shabby balance sheet smoke and mirrors. This was bound to end badly. The board screwed investors and customers alike. Got to love how quickly they exited when the appointment of an X FBI as trustee. So much for good corporate governance when everyone's drinking the same master of the universe cool aide.
http://financialservices.house.gov/UploadedFiles/CME_Group_Response.pdf Looks like MF broke the rules transferring customer funds to meet margin calls.