The latest news on the MF Global bankruptcy and fallout, published in the John Lothian Newsletter the morning of November 9, 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.

‘Options’ Are Explored For Customer Cash Trapped At MF Global 
MF Global Holdings Ltd. (MFGLQ) customers who still have cash locked up with the bankrupt broker-dealer “most likely” will need to go through the claims process, though a court-appointed trustee is examining other options for dispersing some of the funds, according to a spokesman for the trustee.

MF Clients to Get Cash at CME Once Exchange Verifies Transfers
By Matthew Leising and Silla Brush
Nov. 8 (Bloomberg) — Clients of MF Global Holdings Ltd., the futures broker that filed for bankruptcy protection last week, can access their frozen cash collateral at CME Group Inc. after the exchange verifies all traders’ accounts have been transferred to new brokers.

MF Global Creditors’ Committee Includes JPMorgan Chase Bank
By Tiffany Kary – Bloomberg
Nov. 8 (Bloomberg) — MF Global Holdings Ltd. creditors formed a committee including JPMorgan Chase Bank NA and Wilmington Trust Co. as they seek recoveries from the eighth- largest bankruptcy in U.S. history.

MF Global Customers May Have to Share Cash, SIPC Head Says
By Linda Sandler – Bloomberg
Nov. 8 (Bloomberg) — Commodity customers of MF Global Inc. may have to share some of their cash with other customers unless the money missing from some accounts is found, said the head of the group overseeing the liquidation of the broker-dealer previously run by Jon Corzine.

Chicago’s Harris Bank plays role in MF Global mess
Reuters via Yahoo! News
(Reuters) – The hunt for the missing $600 million in customer money at MF Global Holdings Ltd may begin with Harris Bank, a Chicago-based lender that often holds client money for many large futures brokerage firms.

DealBook: A Board Complicit in MF Global’s Bets, and Its Demise
New York Times
Boards need to take responsibility to create a culture that serves to check risk effectively. The MF Global board appears to have failed at this task.

A Derivatives Fight Over MF Global
Over the weekend, Gretchen Morgenson of the New York Times penned a column explaining what it was that doomed MF Global.

MF Global = regulatory fail?
Washington Post
MF Global, the failed derivatives brokerage firm, is the first big U.S. casualty of the euro zone debt crisis, having gone into bankruptcy last week. What’s more, some $600 million in customer accounts seem to have gone missing from the firm, which the FBI is now investigating. Which raises an obvious question in the post-Dodd-Frank world: Where were the regulators?

Farm advisers say MF Global debacle erodes market confidence
Reuters via Yahoo! News
INDIANAPOLIS (Reuters) – Agricultural bankers and advisers say the bankruptcy of giant futures brokerage MF Global has shaken the farm world’s opinion of futures trading and action must be taken to restore confidence in the system.

Gensler: MF Global Highlights Capital Shortfall Risks
NEW YORK (TheStreet) — The chairman of the U.S. Commodity Futures Trading Commission said that the demise of MF Global underscores how quickly a firm can get trapped when capital dries up. Gary Gensler said that in the case of MF “the events are just but another reminder of the importance of having strong regulations to have enough capital in place early and to be ever alert for when short-term …

Did MF Global “Embezzle” $633 Million Of Other People’s Money?
I’ll tell you why I ask this probing question. I received an email this morning from a seemingly enlightened fellow quite conversant with the foibles of the futures trading business. He makes a quite convincing case for the ease by which MF Global might have grasped onto customers’ cash to meet its own margin calls on trades going south or just to resolve trading it was doing in its own name.

OCC Statement On Transfer And Liquidation Of MF Global Customer
Press Release
Since last Tuesday, OCC has been liquidating standardized options positions and transferring futures positions held in MF Global customer accounts pursuant to its rules and, where applicable, SIPC Trustee approval. This process is now essentially complete with only a few small positions awaiting transfer or liquidation.

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