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Commentary

MF Global Files For Bankruptcy

MF Global has filed for bankruptcy as the European debt crisis claimed its first big profile victim in the broker-dealer space. The company, led by ex-Goldman Chief and ex-US-Senator Jon Corzine, went belly up after a series of bets on Euro debt went sour – largely the 50% haircut on Greek bonds as agreed recently.

The bankruptcy, the seventh-largest by assets in U.S. history, is reminiscent of 2008 when Lehman Brothers collapsed at the height of the financial crisis. But market participants said the impact from this collapse, far smaller, would likely be contained.

MF Global traders and counterparties were left scrambling and confused on Monday, as MF Global halted its shares, but did not file for bankruptcy until well after the U.S. markets had opened.

Three traders wearing MF Global jackets were seen leaving the Chicago Board of Trade prior to the opening of pit trading and floor sources told Reuters they had been turned away after their security access cards were denied.

The New York Federal Reserve suspended MF Global from conducting new business with the central bank. CME Group Inc, IntercontinentalExchange Inc and Singapore Exchange Ltd and Singapore’s central bank all halted the broker’s operations in some form except for liquidations.

I had visited the MF Global India office in Mumbai, in 2008, where we’d had some business when I was part of Moneyoga. The place was great and honestly I thought they were one of the most refined brokers out there. I hope the people there are safe, even if the bankruptcy will take its toll.

This doesn’t look like another Lehman. But hey, even Lehman didn’t look like Lehman when it first happened.

  • bemoneyaware says:

    A baby Lehman is what article suggested. What amazed me were the severance details: Quoting the same article:
    Corzine would be entitled to $12.1 million in severance, prorated bonus and other benefits upon being terminated without cause. Two other executives would be entitled to more: retail operations chief Randy MacDonald could get $17.9 million and Abelow could get $13.7 million.
    However, federal bankruptcy law may limit any possible severance payouts.