Like many futures shops, MF Global routinely borrowed money from customers and replaced it with assets like United States Treasury securities. Firms often keep a cushion of cash to protect customer funds, which they are allowed to tap with certain restrictions.
But according to the people briefed on the investigation, MF Global depleted this buffer and then dipped into the customer accounts to the tune of hundreds of millions of dollars. And in the days before the collapse, the firm stopped backing the loans it took from customers.
It is unclear whether MF Global officials knowingly used customer money or if they believed the buffer was intact. If investigators determine that MF Global intentionally tapped the customer funds, they could file both civil and criminal charges.
MF Globalís customers who acted fast got their money back. The rest now must wait in line, and may never fully recover their funds. Bankruptcy experts doubt the trustee will be able to claw back money secured by clients who rushed out the door.
This is a MF Global update. Some interesting comments in the article. Sounds like if you have gold, it is first one to the redemption trough who is fed.
CFH HMagic bball season next year.
Let my Fred's Four Horsemen ride: Georges, Hogue, Nader, and McKay.
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