Apparently at MF Global, moving hundreds of millions of dollars around is the type of decision you don't spend too much time on.
Five days before MF Global collapsed, one employee got approval to move $165 million of the company's funds from one of its accounts to another, in a single minute, according to internal emails reviewed by the Wall Street Journal. Within about 15 minutes of the request, the money had been transferred, but employees soon realized that the funds had actually been taken out of a separate account of customer money -- not one of the firm's own.
The nearly split second decision may have cost the firm and it's customers big time. MF Global went bankrupt October, largely from risky bets on European debt, and managed to lose more than $1 billion of its clients' money in the process. Still, the firm will likely escape criminal prosecution, according to The New York Times, because investigators are having trouble finding evidence that MF Global workers intentionally misused the money.
Even if the company didn't lose the cash intentionally, its ex-CEO Jon Corzine still provoked outrage when he said he couldn’t find it. He told a Congressional committee in December: "I simply do not know where the money is" in reference to the missing funds. Much of the money has been traced to customer accounts and banks, according to an Associated Press report earlier this month.
Still, regulators are taking steps to try and ensure that a disaster of MF Global-proportions doesn't happen again. The Commodity Futures Trading Commission approved a rule in December that put tighter restrictions on how firms can use their customers' money.
That's likely of little comfort to MF Global customers, who have been left wondering what will happen to their money and this year's tax forms. One possibility? A battle with hedge funds over a total of more than a billion dollars. Stay tuned.
SUBSCRIBE AND FOLLOW
Get top stories and blog posts emailed to me each day. Newsletters may offer personalized content or advertisements.Learn more