MF Global Bankruptcy Protection
Discussion
Hi,
I have a relative who has commodities holdings with MF Global. Now that they have filed for bankruptcy protection, can she still access her holdings to sell or is the money now lost? Any thoughts greatly appreciated, she is currently on holiday and doesn't know this has happened, would be nice to have an idea for exit if this can be done.
Thanks,
Steve
I have a relative who has commodities holdings with MF Global. Now that they have filed for bankruptcy protection, can she still access her holdings to sell or is the money now lost? Any thoughts greatly appreciated, she is currently on holiday and doesn't know this has happened, would be nice to have an idea for exit if this can be done.
Thanks,
Steve
thomson said:
Hi,
I have a relative who has commodities holdings with MF Global. Now that they have filed for bankruptcy protection, can she still access her holdings to sell or is the money now lost? Any thoughts greatly appreciated, she is currently on holiday and doesn't know this has happened, would be nice to have an idea for exit if this can be done.
Thanks,
Steve
She needs to follow the instructions from KPMG re registering her interest.I have a relative who has commodities holdings with MF Global. Now that they have filed for bankruptcy protection, can she still access her holdings to sell or is the money now lost? Any thoughts greatly appreciated, she is currently on holiday and doesn't know this has happened, would be nice to have an idea for exit if this can be done.
Thanks,
Steve
Client positions were being force closed yesterday and all accounts whould be in cash now.
They are reckoning that the new laws to prevent a parent company hooving up the cash from subsiduaries should protect MF Europe (inc London) from the US parent.
However, what is key is whether the client funds are seg or non seg. In recent years MFG in London have been very keen to get clients to elect up to 'professional' and thus allow them to de-seg the funds. This means the money is not ringfenced and almost certainly not covered by the UK compensation scheme for retail deposits.
There will undoubtedly be updates on the FSA website.
thomson said:
Nope, stays up here in Scotland, all communication came directly from New York.It was her late husband who got started with MF some years back.She is due home tomorrow, have found an email address for KPMG, will be helping her out with emails etc, fingers very much crossed!
Good luck. I'm afraid using overseas operaters is very dangerous as you lose all domestic protections etc etc.This may be of use:
http://www.kpmg.com/UK/en/IssuesAndInsights/Articl...
Richard Flemming in the Leeds office is lead administrator.
thomson said:
Thanks mate, will let her get a good nights sleep then give her the good news tomorrow! Always knew she wasn't protected, who will be next???
It's a relatively unique set of circumstances that led to this particular failure, rather than say a trading loss which is what I think a lot of people have assumed this is about.Thanks. I think I've sold it but keep forgetting to chase it up. 
http://graemehunt.com/motorcar/119/1994-range-rove...
http://graemehunt.com/motorcar/119/1994-range-rove...
There are apparently some issue with segregation of client money
http://www.ft.com/cms/s/0/1ca619e6-049c-11e1-ac2a-...
Not good news but you would hope it's only a small violation and not widespread.
These guys issued a bond in August which two months later investors are looking at 60 or 70% losses. That's a lawsuits waiting to happen.
http://www.ft.com/cms/s/0/1ca619e6-049c-11e1-ac2a-...
Not good news but you would hope it's only a small violation and not widespread.
These guys issued a bond in August which two months later investors are looking at 60 or 70% losses. That's a lawsuits waiting to happen.
Mis categorisation of client funds is rife in this market.
A lot of clients will have opted up to get favourable rates and now be trying it on. MFs paperwork re seg/non seg is pretty clear and good.
An issue which is yet to come to light is what is happening to the downstream brokers whose capital and client funds were lodged at MF under omnibus structures. That will all be non seg.
Unfortunate story today of a client who last week had his 30m wired to JPM from MF only to find that JPM sent it back on Friday!!!!!
One of my guys has 26m of client funds in there.
Will be interesting to see if kPMG can pull off the new fast track admin rules.
A lot of clients will have opted up to get favourable rates and now be trying it on. MFs paperwork re seg/non seg is pretty clear and good.
An issue which is yet to come to light is what is happening to the downstream brokers whose capital and client funds were lodged at MF under omnibus structures. That will all be non seg.
Unfortunate story today of a client who last week had his 30m wired to JPM from MF only to find that JPM sent it back on Friday!!!!!
One of my guys has 26m of client funds in there.
Will be interesting to see if kPMG can pull off the new fast track admin rules.
Hyper10 said:
Without bothering you too much, what went wrong with MF, thanks
Normally these things are about a big trading loss that the firm cannot absorb but in this instance it looks like the chairman wanted to turn MF from a brokerage to an investment bank so set up a prop desk to trade house money. He then built up a $6bln position in Eu debt on their book, meanwhile the broking arm booked a couple of quarterly losses. DonkeyApple said:
It's a relatively unique set of circumstances that led to this particular failure, rather than say a trading loss which is what I think a lot of people have assumed this is about.
When the credit rating agencies reviewed MF they downgraded them to junk on the back of the singular risk they were holding and this change to their status triggered a whole series of breaches at various major exchanges from which they were suspended, and thus the business kind of ceased to exist overnight.
The problem lies with the US parent company and in theory the European division of which London is a subsiduary is ringfenced under the post Lehmans rules and once all client positions are liquidated and negative client accounts settled then the payout to clients in the UK should be acceptable. They key may transpire to be getting the debtors from the forced liquidations to settle as they will rightly argue that they are only debtors because of the actions of the US parent company. Not many of their clients were seg, so it will be quite messy.
The more immediate issue will be the smaller brokers, funds and trading houses who used MF for clearing. Their whole operating capital could be tied up at present. A fair few of the larger clients had been moving over to JP Morgan in recent years but quite a few must still have been caught out. Most UK trading arcades cleared via MF.
What is pissing off most brokers at the moment is the chance that there could be large claims on the compensation scheme which means we'll get another out of the blue hit on contributions. But, I don't think they had much retail business in the UK any more as they never sorted their back office and were wholly uncompetitive. They lost most of their spread betting clients when Echelon defaulted and Secker took his clients to ETX, IB have been taking much of their futures business and IG ripped out their retail CFD volumes.
ETX is an interesting one as it is owned by the guys behind Marex which is the old Mac Futures which I believe used to clear solely through MF and maybe still do.
MF were also the last broker to offer derivatives in private pensions and while SIPPs should be held seg, SAS' will have certainly been non seg. Quite a few personal pensions could have been hit.
The final thing is the risk of stock overhangs hitting retail derivative holders. MF was one of the last brokers who ran toxic books of large holdings of mid/small cap stocks for the usual suspects. This stock needs to be sold and the big question is whether KPMG in the time it has allotted can carry out off exchange discounted bulk sales or end up dropping the stock in the market causing values to plummet and putting other retail holders on margin calls etc.
The latter is what has happened before. Certainly one holding that is known about is a large position in Mitchells and Butler, if it belongs to Joe Lewis then it is likely he will be able to switch it out with no problem but other players in this area are lacking the cash to be able to take the holding on as physical and most other brokers in the market have already declined to deal with them.
DonkeyApple said:
Hyper10 said:
Without bothering you too much, what went wrong with MF, thanks
It's a typical back street bookie who took on a bad bet and lostDonkeyApple said:
It's a relatively unique set of circumstances that led to this particular failure, rather than say a trading loss which is what I think a lot of people have assumed this is about.
Seems like all banks and insurance companies are a bit like bookies,, seems when they win though they pay themselves HUGE bonuses, and when they lose they shut up shop and shaft their punters ?
speedyguy said:
DonkeyApple said:
Hyper10 said:
Without bothering you too much, what went wrong with MF, thanks
It's a typical back street bookie who took on a bad bet and lostDonkeyApple said:
It's a relatively unique set of circumstances that led to this particular failure, rather than say a trading loss which is what I think a lot of people have assumed this is about.
Seems like all banks and insurance companies are a bit like bookies,, seems when they win though they pay themselves HUGE bonuses, and when they lose they shut up shop and shaft their punters ?
I wonder how many broking clients were aware that MF was attempting to change from a brokerage to an investment bank.
It would certainly appear that the chairman was oftheimpression after his stint at Goldmans that he was some kind of god. He'd been out of the markets for 10 years, maybe he felt he needed to show the world his prowess.
I certainly know of one client who is preparing a class suite to be filed in the US against this man and his board members who's sole job was to prevent this, along with the mysteriously quiet non execs.
Might be interesting.
Luckily, MF were so crap at customer service and back office that they had very few retail clients.
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