MF GLOBAL, the broker-dealer that collapsed this week, broke rules on keeping customer money separate from its own trading accounts, according to the self-regulatory body that oversaw it.
The firm, due in bankruptcy court yesterday, was supervised by CME Group, the exchanges company for whom MF Global was a big source of trading volume.
Craig Donohue, CME chief executive, said MF Global had failed to meet both CME rules on segregated accounts and those of the Commodity Futures Trading Commission. “While we’re unable to determine the precise scope of the firm’s violation at this time, we are investigating the circumstances of the firm’s failure,” he said.
The broker-dealer, run by Jon Corzine, an ex-chief executive of Goldman Sachs and a former New Jersey senator and governor, has become the largest casualty of the euro zone sovereign debt crisis.
But its demise has also uncovered an apparent shortfall in funds on MF Global’s commodities books. That dashed the final attempt to secure a sale before it filed for bankruptcy on Monday, said people close to the situation.
Interactive Brokers Group, a rival electronic broker, had been close to buying the bulk of MF Global. Regulators were continuing to unravel MF Global’s books, trying to account for the shortfall of several hundred million dollars, say sources.
On Monday, the CFTC and Securities and Exchange Commission said MF Global had reported “possible deficiencies in customer futures segregated accounts held at the firm”. It is unclear whether that related to poor record-keeping or something more serious. –(Copyright 2011 The Financial Times Limited)
