When MF Global went bankrupt in October 2011, thousands of its customers in the United States discovered that their overseas investments were not as safe or secure as they had assumed—and that they no longer had access to their funds. The company had faced extraordinary liquidity demands in its final, chaotic days, including margin calls on massive European sovereign-debt bets taken by CEO Jon Corzine and others. Desperate for funds, management improperly raided segregated customer money held by the company’s broker-dealer in the U.S., resulting in a $900 million shortfall. Once MF Global U.K. was put into liquidation, British administrators determined that under U.K. law virtually no money had been actually segregated for customers—which added an additional $700 million shortfall in customers’ foreign accounts. More in the Wall Street Journal here.
