MF Global files for bankruptcy protection

Oct. 31, 2011 at 7:49 PM
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NEW YORK, Oct. 31 (UPI) -- U.S. regulators are looking into the disappearance of hundreds of millions of dollars in client funds at MF Global Holding Ltd., The New York Times said.

Citing several sources it said had been briefed on the matter, the newspaper reported Monday the discovery of missing money derailed an effort by the financial giant to sell off part of its operation to another brokerage, and led MF Global to file for Chapter 11 bankruptcy protection in New York after posting steep losses on European government bonds.

The firm's third quarter filing says it lost $191.6 million as a result of its bond trading.

The Times said almost $1 billion appeared to be missing but that amount had been reduced to about $700 million by late Monday, and more funds were expected to be accounted for during bankruptcy proceedings.

However, federal regulators are looking into whether the company used client funds to support its own trades -- which might constitute a violation of federal regulations requiring companies to keep clients' money separate from company funds, the Times said.

The Wall Street Journal reported Monday the firm listed assets of $41 billion and liabilities of $39.68 billion.

The Federal Reserve Bank of New York Monday suspended the firm's status as a primary dealer, the Journal reported.

The firm's court filing lists JPMorgan Chase and Deutsche Bank Trust Co., as its largest unsecured creditors holding a combined $1.5 billion in bond debt.

The firm is the eighth-largest to file for bankruptcy in U.S. history.

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