The latest news on the MF Global bankruptcy and fallout, published in the John Lothian Newsletter the morning of November 1, 2011.

In the wake of the MF Global bankruptcy, John Lothian Newsletter has created a special section on JohnLothianNewsletter.com 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 Probe Said to Involve Hundreds of Millions in Funds
By Silla Brush – Bloomberg
Nov. 1 (Bloomberg) — U.S. regulators are investigating whether hundreds of millions of dollars are missing from client accounts at MF Global Holdings Ltd., according to two people with knowledge of the matter.
http://jlne.ws/ry3wnL

MF Global Told SEC, CFTC of Potential Customer-Account Lapses
By Silla Brush – Bloomberg
MF Global Holdings Ltd. (MF) told U.S. regulators this morning there were potential “deficiencies” in some customer accounts, according to a joint statement from the Securities and Exchange Commission and the Commodity Futures Trading Commission.
http://jlne.ws/vZDLeV

Corzine’s MF Global Seeks to Reorganize as Broker-Dealer Unit to Liquidate
By Tiffany Kary, Linda Sandler and David McLaughlin – Bloomberg
MF Global Holdings Ltd., the holding company for the broker-dealer run by ex-Goldman Sachs Group Inc. (GS) co-chairman Jon Corzine, filed for bankruptcy protection as it seeks to reorganize after making bets on European sovereign debt. Its broker-dealer unit, MF Global Inc., faces liquidation.
http://jlne.ws/w0VstF

MF Global’s Bankruptcy Filing Sends Clients’ Funds Into Limbo
By Jacob Bunge Of DOW JONES NEWSWIRES
The bankruptcy filing Monday by broker-dealer MF Global Holdings Ltd. (MF) cast billions of dollars in U.S. client assets into a legal limbo, with little clarity on when or how retail investors and financial institutions will be able to access their money, according to people involved in the situation.
http://jlne.ws/rBkRxv

Political suicide
New York Post
Jon Corzine, the CEO of bankrupt broker-dealer MF Global, saw his reputation tossed from the frying pan right into the regulatory fire yesterday when investigators discovered as much as $700 million in customer funds missing from the firm. Officials from two US regulators, the Commodities Futures Trading Commission and the…
http://jlne.ws/w0Qqoj

Were Customer Accounts Pilfered at Jon Corzine’s MF Global? (Updated)
Naked Capitalism
Truth be told, I hadn’t paid much attention to the implosion of MF Global, because so many hedge funds went under during the crisis that yet another levered trading firm death seems less than newsworthy unless it is big enough to constitute a possible systemic event. The collapse of MF Global didn’t seem all that unusual, save for the titilating angle that the firm was headed by former Goldman …
http://jlne.ws/toJx50

Clearinghouses Preparing For Potential Bankruptcy Of MF Global Sources
By Jacob Bunge, Of DOW JONES NEWSWIRES
Exchange clearinghouses and U.S. regulators were preparing late Sunday for a potential bankruptcy filing or other restructuring by broker-dealer MF Global Holdings Ltd. (MF), according to people involved in the process.
http://jlne.ws/tdsBQT

LCH.Clearnet To Become Counterparty For Relevant MF Global Client Positions
By Doug Cameron and Marietta Cauchi Of DOW JONES NEWSWIRES
The bankruptcy of MF Global Holdings Ltd. (MF) on Monday had U.K. regulators triggering new banking safeguards for the first time, while exchanges and clearing entities around the world clamped down on any further trading by the U.S.-based broker.
http://jlne.ws/uxqtX9

Recriminations fly after fall of MF Global
By Tom Braithwaite, Telis Demos and Ajay Makan in New York and Hal Weitzman in Chicago – Financial Times
On Sunday night, MF Global was preparing to announce that its core operating businesses had been rescued in a sale to Interactive Brokers Group, a rival electronic broker, which was prepared to inject …
http://jlne.ws/w1Xz4a

Corzine Had MF Global Leveraged 80 to 1
Forbes
Creating another Goldman Sachs out of this combination was not a prudent strategy. After all, it took Goldman Sachs only 150 years to become Goldman Sachs. MF Global just didn’t have a chance of doing that in a period of risk aversion, unbelievable volatility– especially in MF Global’s key business– the buying and selling of futures contracts in gold, silver, oil, copper, iron ore etc. And …
http://jlne.ws/rVgKHl

Corzine Key Man Bonds Default Before Coupon: Corporate Finance
By Shannon D. Harrington – Bloomberg
Nov. 1 (Bloomberg) — Bond investors lent MF Global Holdings Ltd. $650 million three months ago in a bet Jon Corzine would succeed in turning the futures broker into a mini-version of Goldman Sachs Group Inc. The firm filed for bankruptcy before making its first interest payment on the debt.
http://jlne.ws/sLxKQq

MF Global’s Corzine bullish until the end
By Patrick Jenkins and Megan Murphy – Financial Times
Jon Corzine did not see it coming. When the former Goldman Sachs chief executive, later a New Jersey senator and governor, talked to the Financial Times three weeks ago, he was still sounding bullish about MF Global’s plan to steal business from Wall Street’s struggling elite, and repeated his ambition of displacing Goldman as the world’s top investment bank within a decade.
http://jlne.ws/sg0oMb

MF Global staff await news on their fate
By Ajay Makan and Jason Abbruzzese in New York and Arash Massoudi in London – Financial Times
Cameras were positioned outside the midtown Manhattan headquarters of MF Global to capture executives emerging from inside, while the mood among staff at the company’s UK office was sombre on Monday.
http://jlne.ws/rGm5Ix

At MF Global, Two Other Falling Stars
By KEVIN ROOSE – NY Times
As MF Global filed for bankruptcy on Monday, much of the attention has focused on the Wall Street firm’s chief executive, Jon S. Corzine, the former New Jersey governor and onetime head of Goldman Sachs. But two of Mr. Corzine’s lesser-known deputies — his chief financial office and chief risk officer — have also found themselves at the center of the maelstrom.
http://jlne.ws/ukxcK7

MF Global Exposes Prop-Trading Risk That Volcker Wants to Curb
By Christine Harper, Michael J. Moore and Silla Brush – Bloomberg
Oct. 31 (Bloomberg) — Jon Corzine’s risk appetite just provided Paul Volcker with a demonstration of the dangers of Wall Street proprietary trading.
http://jlne.ws/vrmfgi

MF Global Is First Big U.S. Victim Of Europe Crisis
NPR
MF Global Holdings Ltd., a securities firm run by former New Jersey Gov. Jon Corzine, filed for bankruptcy protection Monday. Concerns about its holdings of European debt caused its business partners to pull back last week, which led to a severe cash crunch, the company said in its filing.
http://jlne.ws/uRsojN

WSJ BLOG/Deal Journal: MF Global: What Would a Buyer Be Getting?
By Jacob Bunge – Dow Jones
MF Global Holdings Inc. is in talks this weekend to sell all or parts of itself. What exactly would a buyer be getting? The firm, which about two weeks ago had a market capitalization of $612 million but now sports a valuation under $200 million, is at its core a commodities and futures brokerage.
http://jlne.ws/tNDeBM

Interactive Brokers Weighs Deal for MF Global
By Jacob Bunge – Dow Jones
Interactive Brokers Group is evaluating a deal for MF Global Holdings Ltd. that could include a purchase of assets or the entire company, according to people familiar with the matter.
http://jlne.ws/ubzmns

MF Traders Blocked by CME, Intercontinental Has Clients Fleeing
By Matthew Leising – Bloomberg
Oct. 31 (Bloomberg) — MF Global Holdings Ltd.’s bankruptcy is sending some of the firm’s customers rushing for new clearing brokers after CME Group Inc. and Intercontinental Exchange Inc. blocked them from new business on their futures markets.
http://jlne.ws/tGNWBC

Exchanges Clamp Down On MF Global’s Trading 
By Jacob Bunge Of DOW JONES NEWSWIRES
Financial exchanges around the world Monday took steps to address the uncertainty swirling around embattled broker-dealer MF Global Holdings Ltd. (MF), as it continued to work toward a potential restructuring after a frantic weekend of negotiations.
http://jlne.ws/w227h3

MF Global Suspended As Primary Dealer, But Treasurys Impact Seen Limited
By Cynthia Lin and Min Zeng Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–The Federal Reserve Bank of New York suspended MF Global Inc. from conducting new business with the government as a primary dealer, but the move likely won’t have a big impact on the Treasurys market, traders and analysts say.
http://jlne.ws/s5cQN6

FSA Puts MF Global UK Into Special Administration Regime
By Marietta Cauchi Of DOW JONES NEWSWIRES
LONDON (Dow Jones)–the Financial Services Authority on Monday said that MF Global UK Ltd. has entered the Special Administration Regime, the first time the scheme has been used following its implementation earlier this year.
http://jlne.ws/sOkaXl

ASIC Response: MF Global
Press Release
ASIC is aware that companies in the MF Global group have been placed into administration. This impacts a number of companies in Australia. Insolvency firm Deloitte has been appointed administrator to the MF Global group in Australia. The administrator will contact clients to advise how their positions and funds are affected.
http://jlne.ws/rFvKvI

JC Flowers Fund Said to See $47.8 Million Loss on MF Global
By Cristina Alesci – Bloomberg
Oct. 31 (Bloomberg) — JC Flowers & Co. has a loss of $47.8 million on its investment in MF Global Holdings Ltd., the New York-based broker-dealer that filed for bankruptcy today, according to a person familiar with the firm.
http://jlne.ws/tZUyZT

Markets Remain Calm As MF Global Faces Problems
By Christian Berthelsen and Jerry Dicolo Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–MF Global Holdings Ltd. (MF) may want to be an investment bank, but it’s still firmly rooted in the plain-vanilla brokerage business. That’s a major reason Wall Street has remained calm despite the firm’s mounting difficulties. For all of Chief Executive John Corzine’s efforts to launch a trading shop within MF Global in the last year, proprietary trading remains a very small portion of its overall business. Its main business remains as a simple broker and trade clearinghouse, matching buyers and sellers of futures, options and other securities. In that area, clients’ funds are protected from risk taken on by the firm’s trading operations.

MF Global collapse hits Australia commodities futures
FT Finance News (ext) via Yahoo! Finance
ASX, the Australian exchange operator, has shut down the country’s agricultural commodities market after the collapse of MF Global, highlighting the impact that the bankruptcy of the US-based broker is …
http://jlne.ws/rs8PK6

MF Global Holdings Ltd. Announces Filing for Chapter 11 Bankruptcy Petition [PDF]
Press Release
ICE Clear Canada: Suspension of Clearing Participant
Press Release
MF Global Canada Co./ MF Global Canada CIE
http://jlne.ws/uno6SV

CME Group Clearing Advisory [PDF]
Press Release
MF GLOBAL INC. SUSPENDED
http://jlne.ws/uoh5V0

[CBOE] Orders Clearing MFGlobal Restricted to “Closing Only” Transactions 
http://jlne.ws/uOaU5L

CFE TO IMPLEMENT “TRADE AT SETTLEMENT” TRANSACTIONS FOR CBOE VOLATILITY INDEX (VIX) FUTURES
Press Release
CHICAGO, October 31, 2011 – CBOE Futures Exchange, LLC (CFE) announced today that CFE will accept “Trade at Settlement” (TAS) transactions in the CBOE Volatility Index (VIX) futures contract beginning on Friday, November 4.
http://jlne.ws/rCKe6D

[LME] MF Global UK Limited 
Press Release
http://jlne.ws/v7HqGD

FSA Japan: Administrative Actions on MF Global FXA Securities, Ltd.
Press Release
http://jlne.ws/uR0uyk

[TSE] Measures against Trading Participant: MF Global FXA Securities, Ltd.
Press Release
http://jlne.ws/vauwLz

Hong Kong Exchanges: MF Global Hong Kong Has Been “Meeting Its Financial Obligations”
Dow Jones
http://jlne.ws/uNaJIU

GreenX Limits MF Global Trading to Liquidation Only
Press Release
http://jlne.ws/vVpkls

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