The latest news on the MF Global bankruptcy and fallout, published in the John Lothian Newsletter (subscribe here) the morning of November 21, 2011.

In the wake of the MF Global bankruptcy, John Lothian Newsletter has created a special section on devoted to news, information and commentary. The section features archived news stories featured in the John Lothian Newsletter, analysis and breaking news. Check regularly for updates. See the MF Global news section here.

MF Global fund probe challenges ‘error’ theory
By Kara Scannell in New York – Financial Times
MF Global executives told regulators that an “operational error” masked transfers of hundreds of millions of dollars out of a customer account, but authorities are challenging this theory as they investigate the $600m shortfall, according to people familiar with the matter.

Vultures circle MF Global’s stake in LME
By Jack Farchy, Robin Wigglesworth and Philip Stafford in London – Financial Times
MF Global’s shares in the London Metal Exchange have emerged as one of the most coveted assets as the bankrupt brokerage is wound down.

Picking Carcass of MF Global
Who would buy the bank debt, bonds and shares of MF Global Holdings Ltd., the bankrupt broker that can’t seem to locate about $600 million of client funds and is beset by investigations? Some of the world’s largest hedge-fund and private-equity firms, that’s who.

Anger mounts as MF Global clients see $3 billion still stuck
Reuters via Yahoo! News
NEW YORK (Reuters) – Three weeks after MF Global’s collapsed, furious former customers are still fighting for access to billions of dollars as they question why as much as two-thirds of their money is still stuck. While authorities have touted the fact that they are returning 60 percent of the collateral and cash that had been frozen in the wake of the broker’s October 31 bankruptcy, a closer …

All’s Fair in Love and War- but NOT Bankruptcy Proceedings
by Lauren Nelson – Attain Capital
The big to-do today on the web has been the decision of MF Global bankruptcy judge, the Honorable Martin Glenn, to distribute 60% of the funds held by 22,000 accounts that held no open positions when the FCM filed for Chapter 11 on October 31st. The decision was the result of arguments made that the release of open positions and their corresponding margin from previously frozen MF Global client accounts was unfair to those who were cash-only when the walls came tumbling down.

WILLIAMS: Jon Corzine’s reckless governance
The Washington Times
MF Global issued $325 million of 6.250 percent, 5-year senior notes in August 2011. The deal was led by Jefferies, a global investment banking group, and co-managed by investment banks BofA Merrill Lynch, BMO Capital Markets, Commerzbank, Natixis, Lebenthal & Co. LLC, Sandler O’Neill and Partners L.P., and U.S. Bancorp. I provide this backdrop because you have to see that once again those who have a fiduciary responsibility to protect investors failed.

The Final Straw? Jefferies And Six Other Banks Sued For “Fraudulent” MF Global Bond Issuance
Zero Hedge
Pick the odd one out of the following 7 banks, while in the process pointing out what they have in common: Bank of America Corp, Citigroup Inc, Deutsche Bank AG, Goldman Sachs Group Inc, Jefferies Group Inc, JPMorgan Chase & Co and Royal Bank of Scotland Group Plc. As it so happens 6 of the 7 are Bank Holding Companies, and have access to the Fed’s various emergency facilities. The seventh …

MF Trustee: No Promise of 100% Collateral Return
The trustee liquidating broker- dealer MF Global Inc. said distributions of collateral in customers’ accounts are “dependent upon assets available and there is no assurance of a 100 percent return.”

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