I was an MF Global client for years. It originated from several years back, when I trading futures part-time, and the former boutique brokerage I used, Lind-Waldock, was taken over by global commodities broker Refco. Refco blew up some trades and went bankrupt. Then it was taken over by MF Global, which as we now know had its own way of blowing things up.
Last week, my MF Global account was locked up all week. Couldn’t transfer money out. Couldn’t cover and exit trades. And as we now know, I wouldn’t have gotten money out even if I tried. What’s the bottom line this morning? It’s still unclear, but as far as I can tell 75% of the money is missing from my transferred account — allegedly locked up with the rest of the funds in the bankruptcy at MF Global Trustees.
Last night, I and thousands of other MF Global customers were trying to figure out what was going to happen with our accounts and money. It became known on late Friday that another futures brokerage was going to take over the accounts. Last night, I was told that the accounts would be transferred and that we could begin exiting trades and squaring positions.
We were told last night we’d been transferred to R.J. O’Brien. The accounts were being taken over but there were scary notices on the R.J. O’Brien Website, which told us a few things:
1) Not all of the equity and cash was being transferred, only enough to cover bare minimum margin requirements on positions.
2) Everybody would be getting mandatory margin calls today, because not all the cash was transferred.
3) There were no answers about where the money went or how to get it back.
So, as of this morning, the bulk of MF Global customer accounts were transferred to Chicago-based futures brokerage R.J. O’Brien, but, according to the Chicago Mercantile Exchange and R.J. O’Brien Websites, customers only received enough equity to cover the active trades in their accounts. The rest of the money is being held with the MF Global Trustees as part of the bankruptcy process. The company is also being investigated for what looks to be hundreds of millions of dollars missing from segregated customer accounts.
You still cannot transfer any money out, even the equity that transferred to R.J. O’Brien.
And check this out: If your account was in 100% cash, zero money was transferred. It’s all stuck with the MF Global Trustees, to await a feeding frenzy of lawyers, bankers, and general legal mayhem resulting from MF Global’s bankruptcy.
Here’s how it looked to me, an MF Global customer: Overnight, my account was transferred with one active trade (so far still profitable) — but the account is missing approximately 75% of the cash or equity. The reason for this, as explained by the R.J. O’Brien Website, is that an “agreement” between MF Global Trustees and the CME was such that only enough cash to cover the live trades was transferred.
As I mentioned, every single MF Global customer with a live trade is getting a margin call today.