Most MF Global Funds Found
Congressional hearing will listen to testimony from chief risk officers.
Compiled by staff
Published: Feb 2, 2012
Reports surfaced Wednesday that unnamed investigators have located almost all of the $1.2 billion first reported missing when securities company MF Global went under last year. The money has been tracked to other customer accounts and banks. According to the New York Times investigators have not publicly disclosed their progress, fearing that doing so might cripple efforts to recover the cash and pursue potential wrongdoing.
Despite the breakthrough on tracing the missing money, a lot of uncertainty remains about retrieving the money. Securities customers withdrawing their money as MF Global began to collapse were paid from accounts that belonged to futures clients, which could make the task of getting the money back difficult.
The Commodity Futures Trading Commission, the regulator leading the investigation, will examine whether anyone accepted customer cash without verifying the source of the money
Michael Stockman, the chief risk officer when MF Global Holdings Ltd. Collapsed, is expected to tell a Congressional committee Thursday that he sounded concerns about the firm’s European sovereign-debt bet in July 2011. Stockman's predecessor Michael Roseman, who is also scheduled to testify, raised concerns about the bets on European sovereign debt prior to his being let go in January 2011 but they were dismissed as "implausible" by MF Global CEO Jon Corzine.
In a prepared statement, Stockman says he agreed with Corzine's assessment initially but changed his mind and told MF Global's senior management and board in July and August that the bets posed liquidity and default risks due to credit market deterioration.
Moody’s cut the brokerage’s rating to just above 'junk' status on Oct. 24, 2011. That downgrade helped push MF Global into bankruptcy on Oct. 31, 2011.
Craig Parmelee, S&P’s managing director of corporate and government ratings, and Richard Cantor, chief credit officer at Moody’s Investors Service, are also scheduled to testify at the House hearing.
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