The latest news on the MF Global bankruptcy and fallout, published in the John Lothian Newsletter (subscribe here) the morning of December 14, 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.

For more on the U.S. Senate Committee on Agriculture’s MF Global investigation testimony, click here.

CME’s Duffy Said Corzine Knew Of Loan To MF Global Affiliate 
WASHINGTON (Dow Jones)–Former MF Global Holdings Ltd. (MFGLQ) Chief Executive Jon Corzine was aware about a loan to one of the firm’s affiliates made using customer segregated accounts, according to CME Group Executive Chairman Terrence Duffy.

CME chief alleges Corzine aware of transfers
By Shannon Bond and Tom Braithwaite in New York – Financial Times
Jon Corzine, the former chief executive of MF Global, “was aware” that the broker-dealer made use of customer funds during its desperate fight for survival, a US Senate hearing was told on Tuesday.

CME Chief Suggests Corzine Knew MF Global Dipped Into Customer Money
Steve Schaefer – Forbes
Jon Corzine was back in Washington to answer questions on the downfall of MF Global Tuesday, and offered slightly stronger language to defend his ignorance of whether any commingling of customer funds took place as alleged, but the real bombshell came later in the day when CME Group Executive Chairman Terrence Duffy said he heard a different story from an MF Global employee.

MF Global Senate Witness “Tossed a Bomb”
ABC News
Senators drilled the former MF Global CEO Jon Corzine who testified before Congress again on Tuesday, as well as the chief financial officer and chief operating officer of the company, about the whereabouts of about $1.2 billion in client money is still unknown.

Senate Ag Committee Holds Hearing on MF Global Bankruptcy
Kansas Public Radio
The Senate Agriculture Committee is trying to find out what happened to customer money that disappeared when derivatives broker MF Global collapsed earlier this year. Up to $1.2 billion in client funds is missing.

MF Global Probe Said to Weigh Illegal Use of Funds for Margin
By Matthew Leising and Silla Brush – Bloomberg
Dec. 13 (Bloomberg) — Regulators are investigating whether MF Global Holdings Ltd. intentionally used customer funds to cover the bankrupt firm’s margin payments on European government bond trades, bolstering their ability to retrieve the missing money, people with knowledge of the probe said.

JPMorgan Actions as MF Global Lender Called Likely to Be Probed
By Linda Sandler – Bloomberg
Dec. 13 (Bloomberg) — The liquidator of the MF Global Inc. brokerage said that “certain” actions of JPMorgan Chase & Co., a lender to the broker-dealer’s parent, “are likely to be the subject of investigation.”

CME Group’s Duffy to Appear Before the Senate Agriculture Committee
Press Release
CHICAGO, Dec. 13, 2011 /PRNewswire/ — CME Group announced that Executive Chairman Terry Duffy will appear today before the U.S. Senate Committee on Agriculture, Nutrition and Forestry, to discuss the MF Global bankruptcy.

CFTC Commissioner Jill E. Sommers Testimony Before The United States Senate, Committee On Agriculture, Washington, DC
Press Release

MF fall has some investors rethinking tactics
Market Watch
The collapse of commodities brokerage MF Global Holdings Ltd. MFGLQ has some investors thinking twice about how they invest in everything from oil to corn to cotton.

MF Global Failure Won’t Alter Exchange Evolution
NEW YORK (TheStreet) — The failure of MF Global will not change the way Wall Street moves stocks and derivatives because many of the exchanges where the now defunct trading behemoth prowled were already undergoing big changes.

What Is Re-Hypothecation, And Does It Explain Why So Much MF Global Money Is Missing?
Business Insider
With each failure of a financial institution, a new term seems to find its way out of thousand page long regulations and onto the front pages. When Lehman brothers collapsed, re-hypothecation was introduced to the front page. In the weeks following MF Global’s collapse, re-hypothecation is back.

CME won’t guarantee funds that remain missing from MF Global
CME Group Chief Operating Officer Bryan Durkin said on Monday the exchange will not guarantee the funds that remain missing from customer accounts at bankrupt brokerage MF Global after they are reimbursed by the bankruptcy trustee. Such a move would be “unwise” and the CME has a “fiduciary responsibility” to its shareholders, he said at a National Grain and Feed Association conference on Monday.

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