http://biz.yahoo.com/bw/080228/20080228005520.html?.v=1 MF Global Announces $141.5 Million Bad Debt Provision Thursday February 28, 8:30 am ET Company Remains Well-Capitalized with No Impact to Client Funds NEW YORK--(BUSINESS WIRE)--MF Global (NYSE: MF - News), a leading broker of exchange-traded futures and options, announced that during the early hours of Wednesday morning, February 27, a registered representative in one of its U.S. branch offices, trading in the wheat futures market in his personal account, substantially exceeded his authorized trading limit. The registered representative concerned has been terminated effective immediately. A failure in one of the companyâs retail order entry systems permitted the representative to establish significant positions in his own account which were liquidated later that morning. The unauthorized activity resulted in him incurring a loss of $141.5 million, which the company, as a clearing member, is responsible to settle at the clearinghouse. As a result, the company recorded a bad debt provision for the full amount. The company believes it has made the appropriate adjustments to its order entry systems to prevent a recurrence of unauthorized trading of this type in the future. In addition, MF Global has engaged a third-party risk technology consultant to review its relevant order entry systems. Client funds are not at all impacted by this event. The companyâs capital and liquidity position remain strong. The loss represents approximately six percent of the companyâs equity, in addition to which it has close to $1.5 billion in undrawn committed credit facilities. In the companyâs fourth fiscal quarter to date, net revenues are exceeding all comparable prior periods of this fiscal year. MF Global remains confident in its business prospects and long-term financial performance. The company will hold a conference call at 11:00 a.m. EST today to discuss the matter. Dial-in information: U.S. (800) 659-2056 International (617) 614-2714 Participant Passcode: 47046771 A live audio webcast of the presentation will be available on the investor relations section of the MF Global Web site and will be available for replay shortly after the event.
The trader probably actually made money, but MF was losing bad and said "hey, this would be a great excuse to use for why we lost money! Lets fire the trader, let him keep the 10 million dollars he made so he doesnt go the press with the real story and then blame him for the 100+ million we lost so that people dont start pulling their money from us...its a win/win!"
nah i actually believe their story this time. i wonder if them covering the short is what caused wheat to limit up yesterday after being down on the day. on the other hand...i didn't believe soc gen at all when it came out.
Ya. It seems like the best excuse for shitty trading. "It wasn't us. It was some goofball we hired that lost the money" I find it almost unfathomable that an institution allows for a so called "rogue" trader to put the company in this position.
wow i didn't actually read what you wrote until someone quoted you. that has to be the dumbest thing i have ever heard.