Fox Business News has a report out saying investigators think MF Global employees co-mingled customer money and company funds on purpose, thus violating securities laws and warranting criminal charges.
From Fox Business:
CME investigators are finding what they believe is mounting evidence that in those final days, executives at MF Global purposefully co-mingled client funds, which under law are supposed to remain separate from money needed to fund a firm’s operation, these people say.
It’s really nothing new, ever since it was revealed that there was $600 million—later estimates increased to $1.2 billion—missing from segregated client funds, everyone has been speculating that someone would be going to jail once they find the responsible party. Remember, it is a cardinal law of Wall Street that clients funds are suppose to remain strictly segregated from company money.
There were initial reports that the client funds weren’t lost, just mixed up within a speedy liquidation process at MF Global’s last days, but there is little ground for that claim now—especially after the amount missing was upped to $1.2 billion this week.
In fact, DealBook reported last week that it is likely MF Global borrowed client funds—which it is allowed to do after putting up collateral—without backing them up, essentially getting a free loan. That sounds a lot like “purposefully co-mingled client funds,” what Fox Business is reporting.
Again, not a shocking exclusive, but a good reminder to everyone that at the end of it all, it is very likely that criminal charges will be awaiting the responsible ones.