Anyone pulling money out of MF Global?

The real question is why is that money not being used to cover the $1.2 billion customer short fall? Or more appropriately, why is the Trustee not making an immediate and aggressive claim for those funds?
 
For sanity's sake, it's worth reading a portion of CME's arguments in favor of the motion that resulted in this "true up" distribution of ~ 2.1 Billion. See document #670 from the trustee's docket found at the following link:

http://dm.epiq11.com/MFG/docket/Default.aspx?rc=1

34. With respect to the merits of the committee’s arguments, first and foremost funds held and maintained in customer segregated accounts are by definition customer property, and property of no one else. See 7 U.S.C. § 6d(a)(2); 11 U.S.C. § 761(10); 17 C.F.R. §§ 1.20, 1.21, 1.26; 17 C.F.R. § 190.08(a)(1). No statute or regulation requires customers to trace or prove that funds held in segregation for their benefit are in fact theirs. Moreover, 100% of the funds being distributed to customers were on the commencement date (and continue to be) held in segregated accounts for customers. Thus, the committee’s argument that the SIPC Trustee should be required to show that funds in segregation are customer property turns the burden of proof related to customer property on its head, and is specious.

35. Moreover, even if any of the funds to be distributed to customers were for some reason determined to be general property of the estate, any customers whose claims are not satisfied from customer property would still be entitled to assert claims against MF Global’s estate, and would be entitled to be paid in full before any equity distribution.3 There also is no evidence of any valid, unsubordinated intercompany claim by MFG Holdings against MF Global, and in light of the circumstances surrounding MF Global’s collapse the reverse is far more likely. Simply put, the creditors in MFG Holding’s bankruptcy case (whose interests are represented by the committee) should not see a penny of value from MF Global’s estate until all customer and other claims at the MF Global level have been paid 100%.

3 “Customer Property” is defined at 17 C.F.R. § 190.08 not only to include all segregated funds, but also all property that was unlawfully converted and is property of the debtor’s estate (17 C.F.R. § 190.08(a)(ii)(F)), and if there is shortfall in customer segregated assets, all other property of the debtor’s estate. 17 C.F.R. § 190.08(a)(ii)(J). Thus, there is virtually no scenario under which any property of MF Global’s estate would be treated as non-customer property in the event of commodity customer shortfall.

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It seems also clear in CME's arguments that the trustee is aware that excess segregated customer funds in the custody of MF Global overseas affiliates. Seems like the longer this drag on the worse the books look. The need for a 550 million guarantee seems as much grandstanding on the part of the trustee, or perhaps its a precursor to the outsized claims that may follow on during this liquidation. I guess the ROR on financial litigation beats the heck out of chasing ambulances for a living provided a firm has the resources and stature to be a credible participant.

b. MF Global UK and MF Global Hong Kong
37. The Joint Special Administrators of MF Global UK Ltd. and the Provisional Liquidators of MF Global Hong Kong Ltd. each filed responses to the Motion. Neither the MF Global UK Administrators nor the MF Global Hong Kong Liquidators oppose the interim distributions, but rather seek (among other things) the establishment of appropriate reserves for the eventual payment of their claims.

38. The MF Global UK Administrators assert that MF Global UK holds a claim of approximately $250 million arising from its MF Global accounts, of which $230 million is held in segregated omnibus accounts for the benefit of MF Global UK customers. Similarly, the MF Global Hong Kong Liquidators assert that MF Global Hong Kong holds a claim of approximately $9 million arising from segregated omnibus accounts for the benefit of MF Global Hong Kong customers.

39. The MF Global UK Administrators fail to acknowledge in their response that the Administrators in turn hold more than $650 million in customer assets that were maintained at MF Global UK pursuant to CFTC Regulation 30.7 (the foreign secured accounts). This amount
represents well over two-thirds of the roughly $900 million owed to U.S. customers trading on foreign exchanges, and these customers have yet to receive a penny distribution on account of their claims.

40. CME urges the SIPC Trustee, MF Global UK Administrators and MF Global Hong Kong Liquidators to expeditiously reach an accord that will permit the immediate release of customer property held by the various legal representatives, and is prepared to support all efforts in that regard. That accord should be implemented as soon as possible, so that customers both in the U.S. and abroad receive prompt distributions on account of customer claims arising from their derivatives trading in the global marketplace.
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of the two addons you inserted,the 3 rd paragraph in the first addon says "all property that was unlawfully converted",are they talking about A, mf global using customer monies to trade or B the bankruptcty defining the remaining money as mf g's ,not customers,if it's A then they are saying other firms cannot legally do it either
 
Just to clarify, for this 72% equalising distribution, is it ONLY usd cash that is being distributed? What about foreign currency deposits? Do they count as cash held at foreign exchanges?
 
Quote from ammo:

of the two addons you inserted,the 3 rd paragraph in the first addon says "all property that was unlawfully converted",are they talking about A, mf global using customer monies to trade or B the bankruptcty defining the remaining money as mf g's ,not customers,if it's A then they are saying other firms cannot legally do it either
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Sorry about the slow reply. Paragraph 3 is actually a footnote within the brief filed. It quotes from CFR' on CEA brokerage bankruptcy. As far as I can tell the point of this brief is to establish / reference support for the idea that a shortfall in customer funds would give customers first claim to assets of the parent holding company undergoing bankruptcy. This brief attempts to refute the idea that creditors of the parent holding company have any rights to funds that may have been transferred from customer accounts legally or otherwise (?).

The central issue seems to lie with the forensic accounting. Reading more news over the weekend some money may have been transferred sooner than thought. What is really interesting is that the CME audit during the last week came up good. So someone was pretty good at flying the kite that week.

As to the 72% distribution, to my knowledge it's all US held assets. Bringing back $ from foreign affiliates has not occurred as of yet. This would seem like an easy thing to accomplish, but so far no luck. Not sure why firms are reluctant to return surplus funds. Perhaps the freeze up in the Eurodollar markets have something to do with this situation.

My take on your question is that it depends on where those funds were kept. If they were in US banks they should be available. I suspect (but have no idea for sure) that non$ assets are pretty much held overseas in affiliates. These balances look sound based on what I've read. The challenge of getting these returned should be straight forward were it not for the actions of lawyers in the legal system.
 
I wish these articles would stop focussing on his ability (or lack thereof) as a trader. His views on the market are totally irrelevant. The fact that money was missing from customer accounts potentially makes him a CRIMINAL.
 
Quote from Ash1972:

I wish these articles would stop focussing on his ability (or lack thereof) as a trader. His views on the market are totally irrelevant. The fact that money was missing from customer accounts potentially makes him a CRIMINAL.
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So true, as CEO of what was primarily a retail firm his first obligation should have been to customers not about building a mini Goldman. If there were flaws in the revenue structure, fix them the right way, through proper accounting. These kind of horse shit stories create sympathy where there should be outrage at the gross malfeasance that took place. This situation clearly shows that no lessons were learned from the debacle of 06 - 09. MF probably won't be the last brokerage to blow up if things wash out in Europe.

The story of JC and the mess he was steward over at MF is nothing to write home about or to brag about in the press. JC's testimony so clashes with insider accounts of his corporate persona that he's totally discredited himself in public. Trading 101 - Cut you losses. Holding a leveraged bond bet with all the sharpies waiting daily for Europe to implode. Vulnerabilities poorly hidden by shabby balance sheet smoke and mirrors. This was bound to end badly. The board screwed investors and customers alike. Got to love how quickly they exited when the appointment of an X FBI as trustee. So much for good corporate governance when everyone's drinking the same master of the universe cool aide.
 
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