It was earlier reported that MF Global, the brokerage firm formerly run by John Corzine, was entering bankruptcy with a shortfall of $593 million, or 11 percent of customer funds. Now it seems the shortfall is a tad higher—somewhere in the neighborhood of $1.2 billion, double previous estimates. A billion here, a billion there, and pretty soon you're talking real money!
It's unclear what's behind MF Global’s earlier lower estimates, or where the other $700 or so million went. The Times reports that "authorities are still searching for the money, and are considering two possibilities. One is that MF Global used the money to meet trading partners’ demands for extra cash, which could come back. The other is that it was used to cover trading losses, which would be unrecoverable." Has anybody looked at how many pimped out cargo vans MF Global bought?
According to Business Week, James Giddens, the bankruptcy trustee, released a statement today saying that distributing 60 percent "of what should have been in customers' accounts will take $1.3 billion to $1.6 billion, or almost all of the assets he has within his control. While he expects the transfer will occur in early December, he doesn't have access to funds beyond $1.6 billion." The bankruptcy, which is estimated to be the eighth largest bankruptcy filing in U.S. history, came after the New York-based company revealed that it had made a $6.3 billion bet on European sovereign debt.
