Six months ago the accounting firm PricewaterhouseCoopers LLP said MF Global Holdings Ltd. and its units “maintained, in all material respects, effective internal control over financial reporting as of March 31, 2011.” A lot of people who relied on that opinion lost a ton of money.
MF Global filed for bankruptcy on Oct. 31. This week the trustee for the liquidation of its U.S. brokerage unit said as much as $1.2 billion of customer money is missing, maybe more. Those deposits should have been kept segregated from the company’s funds. By all indications, they weren’t.
What’s the point of having auditors do reports like this? And are they worth the cost? It’s getting harder to answer those questions in a way the accounting profession would favor.
When an auditor certifies that a client’s internal controls are effective, that’s supposed to mean the company can do basic functions like maintain accurate financial records, detect unauthorized transactions and keep track of its receipts and expenditures. We know MF couldn’t do these things during the final days before its bankruptcy filing, when former New Jersey Governor Jon Corzine was still its chief executive officer.
“Their books are a disaster,” Scott O’Malia, a commissioner at the Commodity Futures Trading Commission, told the Wall Street Journal in an interview two weeks ago. The newspaper also quoted Thomas Peterffy, CEO of Interactive Brokers Group Inc., saying: “I always knew the records were in shambles, but I didn’t know to what extent.” Interactive Brokers backed out of a potential deal to buy MF last month after finding discrepancies in its financial reports.
If Pricewaterhouse can’t spot control weaknesses at a relatively small shop like MF, which had $41 billion of assets, it’s a bit much to expect that the firm would catch anything materially amiss at Goldman, which has $949 billion of assets, or at a serial acquirer such as JPMorgan, with $2.3 trillion of assets.
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Showing posts with label mf global holdings. Show all posts
Showing posts with label mf global holdings. Show all posts
Friday, November 25, 2011
Sunday, November 13, 2011
If Lehman’s Brothers Collapse didn’t convince you…how about MF Global’s collapse = all industries and in particular the financial industry needs severe regulation.
Jon Corzine’s disastrous tenure at MF Global will boost something that Jon Corzine, the liberal senator from New Jersey, undoubtedly would have supported: the Dodd-Frank Act.
The financial reform law passed last year by Congress was aimed at a preventing a relapse of the crisis that nearly brought the U.S. economy to its knees in 2008. But efforts to implement the law have been stymied by congressional Republicans and industry lobbies. The law requires various federal regulators to write and pass about 400 rules, according to an analysis by law firm Davis Polk & Wardwell. Of those, only 74 rules have been finalized.
That may now change. While the failure of MF Global, which Corzine oversaw as its chairman and CEO, did not have the same seismic impact as the collapse of Lehman Brothers, experts say the shuttered futures firm speaks directly to the need for certain aspects of the regulatory framework envisioned by Dodd-Frank. It also gives ammunition to those who want to push through the mountain of rulemaking that remains to be done.
"It adds fire under our feet to get these regulations done as soon as possible," said Bart Chilton, a member of the Commodity Futures Trading Commission, in an interview. A staunch advocate for strong regulation, Chilton called MF Global the "new poster child" for the need to beef up market oversight. The CFTC is tasked to write 64 rules, of which it has completed 22, according to Davis Polk.
MF Global was brought down the last week of October after the publicly traded firm reported a record quarterly loss; saw its credit rating slashed to junk; spooked its trading partners and shareholders with its vast and highly leveraged exposure to European sovereign debt; has roughly $600 million unaccounted for, and a federal investigation is underway into both the whereabouts of the money and possible violations by the firm over its disappearance.
Meanwhile, the court-appointed trustee overseeing MF Global’s liquidation on Friday fired more than 1,000 of the firm’s broker-dealer employees to preserve funds for the claims process.
About 50,000 futures customers had their trading accounts frozen and partially transferred to other firms when MF Global entered bankruptcy.
MF Global belonged to an organization that is a central tenet of Dodd-Frank, said Kevin McPartland, senior analyst with the TABB Group.
"MF Global will encourage regulators to shine a much brighter spotlight on questions of clearinghouse governance," she said.
Others are using MF Global’s failure as a clarion call for imposing Dodd-Frank’s ban on federally insured banks using their own capital for speculative investments, otherwise known as proprietary trading.
It’s high time that we get on with it!!!
The financial reform law passed last year by Congress was aimed at a preventing a relapse of the crisis that nearly brought the U.S. economy to its knees in 2008. But efforts to implement the law have been stymied by congressional Republicans and industry lobbies. The law requires various federal regulators to write and pass about 400 rules, according to an analysis by law firm Davis Polk & Wardwell. Of those, only 74 rules have been finalized.
That may now change. While the failure of MF Global, which Corzine oversaw as its chairman and CEO, did not have the same seismic impact as the collapse of Lehman Brothers, experts say the shuttered futures firm speaks directly to the need for certain aspects of the regulatory framework envisioned by Dodd-Frank. It also gives ammunition to those who want to push through the mountain of rulemaking that remains to be done.
"It adds fire under our feet to get these regulations done as soon as possible," said Bart Chilton, a member of the Commodity Futures Trading Commission, in an interview. A staunch advocate for strong regulation, Chilton called MF Global the "new poster child" for the need to beef up market oversight. The CFTC is tasked to write 64 rules, of which it has completed 22, according to Davis Polk.
MF Global was brought down the last week of October after the publicly traded firm reported a record quarterly loss; saw its credit rating slashed to junk; spooked its trading partners and shareholders with its vast and highly leveraged exposure to European sovereign debt; has roughly $600 million unaccounted for, and a federal investigation is underway into both the whereabouts of the money and possible violations by the firm over its disappearance.
Meanwhile, the court-appointed trustee overseeing MF Global’s liquidation on Friday fired more than 1,000 of the firm’s broker-dealer employees to preserve funds for the claims process.
About 50,000 futures customers had their trading accounts frozen and partially transferred to other firms when MF Global entered bankruptcy.
MF Global belonged to an organization that is a central tenet of Dodd-Frank, said Kevin McPartland, senior analyst with the TABB Group.
"MF Global will encourage regulators to shine a much brighter spotlight on questions of clearinghouse governance," she said.
Others are using MF Global’s failure as a clarion call for imposing Dodd-Frank’s ban on federally insured banks using their own capital for speculative investments, otherwise known as proprietary trading.
It’s high time that we get on with it!!!
Tuesday, November 1, 2011
Sounds like a lack of transparency, ethics, & controls are the root cause, in this exciting advenutre of the 1% eat their own!!!
MF Global Holdings Ltd. (MF) fired 15 employees from its Japan unit before filing for bankruptcy yesterday, said Kazuyuki Sugimoto, secretary general at the Federation of Foreign Bank Employees Union.
The analysts, traders and sales staff had their employment contracts terminated, Sugimoto said in a telephone interview in Tokyo today. Workers from the New York-based securities firm’s Japan unit joined the federation in September, he said.
“We are not able to comment on this,” Clara Goh, MF Global’s Singapore-based spokeswoman for Asia Pacific, wrote in an e-mailed reply to inquiries about the dismissals from Bloomberg News.
The Japanese unit, MF Global FXA Securities Ltd., has 53 employees, according to the Financial Services Agency. The FSA issued an order protecting the assets of the unit and instructed the firm to improve its business, it said in a statement today.
MF Global, the holding company for the broker-dealer run by former Goldman Sachs Group Inc. co-chairman Jon Corzine, listed debt of $39.7 billion and assets of $41 billion in Chapter 11 papers filed yesterday to the U.S. Bankruptcy Court.
The impact of the company’s collapse on Japan’s financial system will be negligible, Financial Services Minister Shozaburo Jimi told reporters in Tokyo. MF Global FXA Securities has capital of 935 million yen ($12 million), the FSA statement said.
Of the 15 dismissed workers, 14 were based in Tokyo and one worked in Singapore, Sugimoto said.
The analysts, traders and sales staff had their employment contracts terminated, Sugimoto said in a telephone interview in Tokyo today. Workers from the New York-based securities firm’s Japan unit joined the federation in September, he said.
“We are not able to comment on this,” Clara Goh, MF Global’s Singapore-based spokeswoman for Asia Pacific, wrote in an e-mailed reply to inquiries about the dismissals from Bloomberg News.
The Japanese unit, MF Global FXA Securities Ltd., has 53 employees, according to the Financial Services Agency. The FSA issued an order protecting the assets of the unit and instructed the firm to improve its business, it said in a statement today.
MF Global, the holding company for the broker-dealer run by former Goldman Sachs Group Inc. co-chairman Jon Corzine, listed debt of $39.7 billion and assets of $41 billion in Chapter 11 papers filed yesterday to the U.S. Bankruptcy Court.
The impact of the company’s collapse on Japan’s financial system will be negligible, Financial Services Minister Shozaburo Jimi told reporters in Tokyo. MF Global FXA Securities has capital of 935 million yen ($12 million), the FSA statement said.
Of the 15 dismissed workers, 14 were based in Tokyo and one worked in Singapore, Sugimoto said.
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