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Julie Ver Hage, a Fox Business summer intern, has a personal account about how the MF Global bankruptcy debacle has affected her family. When the broker-dealer run by CEO Jon Corzine filed for bankruptcy last October, Ver Hage’s father–a fourth generation farmer with a small dairy farm in Michigan–lost funds in his brokerage account like thousands of other MF Global customers.
Here’s Ver Hage’s account of what happened to her dad:
Here’s how it went down, at least from my father’s perspective: He contacted his broker sometime during the week of October 4, 2011, expressing his concerns about MF Global’s stability after hearing a report on FOX Business that Corzine had made a fairly risky bet on sovereign debt issued by at least two troubled European countries, Italy and Spain.
In other words, MF Global was doing more than simply buying commodities for farmers and ranchers; it was betting big in the global markets. Taking big bets in the markets is exactly how Bear Stearns and Lehman Brother got into trouble in 2008. His broker said that there was nothing to worry about because customer money is supposed to be segregated. He assured my father that if anything went wrong, his money would be there and he could simple transfer his account to another firm.
Toward the end of the month when MF Global was ready to file for Chapter 11 bankruptcy protection and reportedly looking for a buyer to avoid complete liquidation, Ver Hage said her parents thought their funds were safe because that’s what they had essentially been told.
It turned out that her parents accounts were frozen the following day on October 31st and that deal to avoid complete liquidation fell through because customer funds were found to be missing.
The Fox Business Network intern, who works for Cavuto, explained that farmers like her father typically trade commodities through brokerages to hedge against future price changes.
Ver Hage said her father lost “a relatively small amount” of $7,000 as a result of the MF Global debacle, but she knows other farmers who lost a lot more.