Of Special Interest
- Financial wellness affects half of peoples’ mental or physical health, finds report
- Study finds traditional financial institutions embrace Fintech disruption
- Grass is greener for environmentally friendly businesses, finds Barclays
- Prospective homeowners would consider a 40-year mortgage to escape renting, finds Santander
- Millennials’ needs are changing the face of banking industry, says new report
- FS is putting consumer data at risk by failing to protect mobile apps, says Arxan
- A lack of belief in their ability holds 28% women back in work, says Cambridge & Counties
- ‘Which?’ reveals Scotland has lost over a third of its bank branches in eight years
- Next downturn unlikely to be as bad as 2008, according to S&P
- FCA reveals findings from first cryptoassets consumer research
- US consumers favour single mobile app for banking and payments
- Banks suffering major IT shutdowns every day, ‘Which?’ reveals
- The US will be a key offshore centre in 2019, says GlobalData
- Debit industry changes markedly in 10 years of the Debit Issuer Study
- UK's ‘Big Five’ face ‘too big to compete’ as small challengers secure stellar returns
- Banks as vulnerable now as before crash, says new study
- Leverage ratio a constant conundrum for European and US banks, says SNL
1st November 2011
MF Global Files for Chapter 11 protection
MF Global Holdings filed for chapter 11 protection on Monday. The broker / investment organsiation has struggled since it became known that it was holding $6.3bn in Eurozone sovereign debt. There were also more general concerns over the high risk strategy adopted by Jon Corzine, a former chairman of Goldman Sachs Group Inc. who took over as chairman and CEO in March 2010. He sought to alter MF Global from derivatives broker to organisation involved in principal trading.
Corzine tried to find investors or an outright buyer when things started to turn bad. The broker was in negotiation with Interactive Brokers late last week and through the weekend. In the early hours of Monday it is reported that Interactive Brokers determined they could not conclude a satisfactory deal with some suggestion that due diligence had uncovered more serious problems than had been realised.
Under US regulation the Securities Investment Protection Corp. will appoint a trustee to take over MF Global Holdings Ltd. SIPC are responsible for ensuring the orderly unwinding of any failed brokerage and also maintain a fund which can be used to compensate clients. MF Global listed assets of $41 billion and $40bn in liabilities. When organisations file for protection this type of near solvency is often listed. Usually within a matter of days the ratio changes to liabilities greatly outweighing assets. Keepers of statistics say that MG Global will become the eighth largest bankruptcy within the last 30 years.
A JC Flowers investment fund is one of the biggest investors in MF Global with a 10% equity stake.