The Final Tangled Transactions At MF Global Totaled More Than $327 Billion

Jon Corzine MF Global

Photo: Business Insider

James Giddens, the Trustee in charge of winding down operations at MF Global and disbursing locked up funds to clients, announced today that he has traced most of the final transactions made during the week the brokerage house failed, totaling some $105 billion.In the few days before MF Global filed for bankruptcy, Gidden’s office alleges, the brokerage company began using far greater levels of client funds to keep the company running.

MF Global had conducted these kinds of transfers prior to October 26, when segregated commodity customer accounts first ran into deficit, but they had generally been for amounts less than $50 million. MF Global filed for bankruptcy on October 31.

“The rush to meet funding needs for collateral, margin and customer liquidations led to billions of dollars in securities sales, draws on credit facilities, and a web of inter-company loans across affiliates, some foreign,” a status update issued by Gidden’s office today showed.

The volume of transactions executed by the now failed brokerage house jumped to “unprecedented” heights in the company’s final days of solvency, Giddens said in a statement.

In the final days, the crush of these transactions made it impossible for employees to properly document all of the company’s dealings.

“For three months our investigative team has worked to understand what happened during the final days of MF Global when cash and related securities movements were not always accurately and promptly recorded due to the chaotic situation and the complexity of the transactions,” Giddens said. 

To date, Giddens’ office has traced 840 cash dealings that total some $327 billion, along with related securities worth more than $100 billion. 

The transactions involve eight institutions and include 47 bank accounts. 

“With these preliminary investigative conclusions in hand, we will analyse where the property wired out of bank accounts established to hold segregated and secured property ultimately ended up,” Giddens said. “We will then determine whether there is a sound and legal basis for recoveries against third parties that will help make customers whole.”

Movement of Cash During MF Global's Final Month Before Filing For Bankruptcy

Summary of Events in October 2011 Leading to Bankruptcy

As Margin Calls Increased, MF Global Faced A Major Strain On Capital

On Oct. 26, The Company Finally Moved To A Net Deficit In Segregated Accounts

A Complete Guide to MF Global's Downfall

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Click here to read everything you need to know about MF Global's downfall >

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