On Monday morning, MF Global, the global brokerage for commodities and derivatives, filed for bankruptcy. The firm’s roots go back over two centuries, but in less than two years under CEO Jon Corzine, whose stellar resume includes serving as the chairman of Goldman Sachs, as New Jersey’s U.S. Senator, and as New Jersey’s governor, MF Global collapsed, after buying an enormous amount of European sovereign debt. The instant wisdom is that he made a big bet as part of his plan to transform MF Global into a firm like Goldman Sachs, which executes trades on behalf of its clients, and also puts its own money at stake. Although the size of the wager has received a great deal of scrutiny, the accounting and the disclosure surrounding it have not–and may have played a role in the firm’s demise.
In the 24 hours since the filing, more ugly questions have piled up, with the New York Timesreporting that hundreds of millions of dollars of customer money have gone missing, and the AP saying that a federal official says that MF Global has admitted to using clients’ money as its problems mounted. Whether this was intentional or sloppy remains to be seen; MF Global didn’t respond to a request for comment by press time.
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