Theoretically if the stock goes to zero, should have no impact on customers' "segregated funds"... after all, that's exactly the purpose for segregation.
It's true; Refco retail US accounts lost nothing (I don't even think there was an interruption in the client's ability to trade), even when Refco went under due to massive corporate fraud. And anyway, there's no indications of fraud at MF, although expectations for the core business itself have clearly been shoved down.
Hmm, but you're missing one point, see my attachment: Moody's baby. On Wall St here, Fitch is second class.
And, S&P.. Lowered the ratings in Feb, with watch neg down. See attachment. EDIT: 2 out of 3 firms. I'm willing to bet that S&P will lower their rating before Jul 31... But here's the harbinger: MF apparently has some lax controls within it's internal trading division. They keep popping up in the news too often for these types of things.
Now with all that said... I too, do not believe MF global is going to go bust. They have a serious problem with risk management and internal controls, however, so these moves in their stock should serve as a wake up call to move a little faster on getting that area fixed. Bernard Dan was appointed the NA COO.. For those who may not know, BD is the former head of the CBOT. He stepped down when the CME/CBOT merger was completed. So no, they may not go the way of Refco. And, they are attempting to fix the issues that seem to be keeping them in the news. That may placate either Moody's or S&P in the intermediate term (obviously, it didn't placate Moody's to do a DG today). One has to be careful in these times. The ratings agencies are going to start covering their a$$es. It's natural after they got the ratings for ABS's, etc. totally wrong. My 0.02, -LC (aka CBK) EDIT: Plus that 450MM loan line from a bank should *hopefully* put this baby to rest.
You're problem is, these scum will start spreading rumors now, and scare the hell out of you just like they did on 3/16. This is the problem. And the authorities don't seem able to do anything about it. Watch for rumors tomorrow. Let's see if the Feds back up what they said back in March. No rumors on financials. No position, btw.
The point is, you were implying Man are fraudsters, yet you didn't cite any evidence. Allegations like that need to be backed up. Refco was an accounting fraud. Do you have anything you can point to that suggests Man is the same?
By Matthew Leising June 13 (Bloomberg) -- MF Global Ltd., the futures broker that lost $141 million earlier this year on unauthorized wheat trades, said it has set aside $10 million for potential civil penalties from U.S. regulatory probes. The company today disclosed two investigations into natural- gas trades it helped facilitate. The U.S. Attorney's Office in New York is probing over-the-counter gas trades of a customer, the Bank of Montreal. In addition, the Commodity Futures Trading Commission sent a so-called Wells notice in May, saying it may recommend legal action over two natural-gas trades in 2004, according to MF Global's regulatory filing. ``It seems like MF Global didn't have good control systems, they're getting burned more than once. It wasn't just the wheat trades,'' said Bruce Weber, a finance professor at the London Business School. The $10 million set aside ``is a material amount. They're not a giant broker that can absorb something like that easily.'' MF Global Sets Aside $10 Million for Trading Probes (Correct) The unauthorized wheat trades, disclosed in February, are being investigated by the CFTC and the U.S. Attorney's Office in Chicago, the company said previously. MF Global also faces five lawsuits that have been consolidated into a class action related to the wheat trades by former broker Evan Dooley, the company said in the filing. MF Global, the world's largest broker of exchange-traded derivatives, initially reported losing $141.5 million on the wheat trades and today reduced that to $141 million. Grand Jury Probe The natural-gas trades related to Bank of Montreal are also being investigated by a New York County grand jury. An unnamed BMO trader, using a broker at MF Global, ``allegedly mismarked his book,'' MF Global said, meaning he entered incorrect or false trade data. The Bank of Montreal last year lost $618 million in natural- gas trades, the largest loss ever by a Canadian bank. The bank said last May it had ``increased concerns'' about the reliability of quotes from its main broker, Optionable Inc. After increasing the size of its loss, BMO said it was investigating ``whether any potential irregularities in trading and valuation took place,'' according to a May 17, 2007 statement. The CFTC and the U.S. Securities and Exchange Commission are also involved in the investigation, MF Global said. Neither MF Global nor its broker have been named as targets of the probe, the company said. I'm not going to post the entire article from my terminal, i'm sure bloomberg's website has the same article