MF Global: Another Wall Street Blowup

Yet another Wall Street firm blows up and goes bankrupt. This time its broker-dealer MF Global led by former Goldman Sachs CEO Jon Corzine.

Thankfully, this time we tax payers don't have to bail this company out.

In October, MF Global would announce a $190 million dollar 3rd quarter loss as bets on European sovereign debt imploded. The company would bet $6.3 billion on the recovery of Italy, Spain, Belgium, Ireland, and Portugal. Days later, the house of cards would fall and it would declare bankruptcy.

And oh the poor MF Global shareholder

Common shares of the publicly traded company which traded as high as $30/share in 2008 shortly after its IPO offering, would only fall to disgrace Friday, to trade at a mere 25 cents.

And oh the poor MF Global customer

150,000 retail customers of MF Global are reeling. Most are currently unable to trade or gain access to their accounts due to being locked down by US Securities officials. Worse yet, $633 million dollars is missing in customer funds according to the CFTC. Speculation that MF Global used customer funds for its own insider trading grew, which led customers screaming bloody murder.

Update: 11/21/11 Regulators say that as much as $1.2 billion dollars is missing.

Get Your Hands Off My Capital!

So imagine you transferred from your savings account to your MF Global trading account with a $1,000,000 balance. Did you know there is no law preventing MF Global from dipping into your funds to trade its own position?

Heck, they may even use your money to trade against you. How sick is that?

That is how screwed up this is. Federal regulation requiring a higher degree of transparency and oversight is needed before people like you and me get pick pocketed.

Is Jon Corzine Good At Playing Checkers?

And what about CEO Jon Corzine? On Friday, he stepped down. The former New Jersey governor, senator and head of Goldman Sachs has since hired criminal attorneys at Dechert. Corzine has also decided to relinquish his $12 million dollars in severance pay.

Will the guy be dressed up in a a black and white striped outfit playing checkers in jail with Bernie Madoff? Only time will tell.

About Kerry Kobashi

Kerry is the founder of KerryOnWorld. He lives in Silicon Valley and has worked as an engineer and project manager. He owns Kobashi Computing a consulting company.