Did Interactive Brokers' CEO Commit Insider Trading By Buying 8 Million Shares Of MF Global Ahead Of Its Bankruptcy?

Tyler Durden's picture

While certainly very much ironic, considering that his purchase is now completely worthless, the news that Interactive Brokers' CEO Thomas Peterffy, who up until the 11th hour was expected to be the buyer of the now liquidating exchange only to unwind the deal upon discovery of hundreds of millions in missing commingled funds, bought 8 million shares of MF Global stock for his own account is certain to raise many alarm flags at whatever disgraceful farce passes for US regulators these days. As a reminder, "the week before MF Global filed for bankruptcy on Oct. 31, the New York-based company’s shares fell 67 percent to $1.20. They have since dropped to 14 cents." So when did Peterffy start buying? "I started to buy the stock as it went down,” Peterffy, chief executive officer of Greenwich, Connecticut-based Interactive Brokers, said today in a phone interview. He said he still owns the shares. “You win a few, you lose a few."

True dat... the problem is that in this case you may well lose more than just 'a few' considering you were using your own cash to buy a stock knowing full well (and possibly in possession of material non-public info - in that case it is a clear cut case for the Feds) you would soon use the cash and possibly debt of your company as leverage to generate a massive personal return.

Granted, timing is an issue, and it all depends on just when Peterffy started accumulating. Which is why we will be closely watching to see at what prices and at what times the CEO dipped one toe, then another, then jumped head first. We also wonder just what comlipance process would allow him to buy the stock that the company would soon be looking into: even the most blind General Counsel must realize the optics of this revelation stink to high heaven. After all, it is precisley a variation of this theme that got David Sokol fired from Berkshire Hathaway..

More from Bloomberg:

Customers of MF Global, the holding company for the broker- dealer that was run by ex-Goldman Sachs Group Inc. co-chairman Jon Corzine, have been able to transfer only a portion of their accounts to new brokers. The broker-dealer unit, MF Global Inc., faces liquidation. The lack of access to customer cash at MF Global is a “huge tragedy,” Peterffy said.


“It’s a horrible black spot on the futures industry,” he said. “The next time something like this happens, the positions should be immediately liquidated and the money distributed.”


Corzine, 64, increased risk-taking at MF Global as part of his strategy to re-make the futures broker into an investment bank, including $6.3 billion in European sovereign debt positions that roiled markets.


Discrepancies over missing customer funds used to back futures trades doomed a potential acquisition by Interactive Brokers, said Hans Stoll, an Interactive Brokers director and a professor of finance at Vanderbilt University in Nashville, Tennessee. The deal could have averted the bankruptcy filing.


“The board certainly considered that purchase and stepped away from it at a point where it became clear there were lots of uncertainties about the accounts and segregated funds,” Stoll said in a Nov. 1 interview.

So will the SEC investigate this, or will it be up to Egan Jones to force the company to disclose critical information needed for shareholders to make the right decision?

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Irish66's picture

What did Flowers do.....???

rubyruffruff's picture

sold the shares they had to peterffy (sumone has 2b the dumbass in the room).......flowers ain't tht stupid......if there was any value to mf he would have swooped in and made a deal with johnny boy corzine to steal the company at a cheapo price.........flowers ran cause he must have a an early look see at the cooked books or knew how fk'd the trades corzine had put on were.........peterffy suffered from the simple ailment of gross greed......he thought he could milk all the brokerage bus. and neutralize the sovergn losses in mayb 2 or 3 yrs.......with all the brokerage cash missing he got handed a massive bag of shit 2 hang onto........betcha he was buying b4 interactive brokers had done full due diligence.......posted by an interactive brokers custy of the last 8yrs........mayb peterffy wants 2 explain sum his facinating market making algo's in stock options

Hard1's picture

Reverse engineering bitchez!

AldousHuxley's picture

That's the kind of idiots heading up the financial sector. Even with INSIDER TRADING, they still lose money.

Yet they have sell side analysts pumping the idea that somehow they can guess the price of a stock 6 months from now just because they stroke the CFO's ego during an earnings call.


Bankruptcy Bonuses? MF Global Rewards Staff Just Before Bankruptcy




For wall street, it is wall street first.



mynhair's picture

Flowers made some hand gesture that scared a Lib.

Seasmoke's picture

looks like he was corzined

hambone's picture

<Rant on> I'm 41yrs old, happily married, and two great kids in their teens - I'm generally a "winner" in this economy as I'm part of the 1.5% (though a long way from 1.5% to 1%!) so what the fuck do I have to complain about?  Why the fuck am I so mad?  And yet, I feel my guts are being torn out daily as I watch the thievery, lies, misdirection, manipulation, and collapse of faith, trust, honesty, justice, and optimism.  I have no interest in working within such a fraudulent system any longer and can only bring myself to do the absolute minimum.  Some days I don't recognize myself.  Day by day I'm clearer that the collective is dead and that we are all on our own, dog eat dog (not exactly the lesson I’d like to teach my kids).  Maybe because I'm a fucking nerd that studies history, economics, finance, politics in my spare time that I care to see what is being done more so than the average person???  Maybe because I believe in America and I can't look away and isolate myself from the "big world" - I feel America's shortcomings as my own.

I've likely 40yrs to live and fuck if I'm going to watch broken gov. and crooked private institutions steal what little I've saved, what opportunity my kids will have by inflation, taxes, outright confiscation all so a few can live oh so well, to fulfil pledges I never made to unions, to make whole foreign bond buyers, to bailout and bonus bankers who played the moral hazard.  Likewise I've no interest in joining the few to screw the many.

I now know there are many like me that are fucking seething w/ rage at what is being done...I yearn for the opportunity to destroy the system that rewarded me and likely lose some or all of what I've saved but at least have a chance to rebuild a society where my kids can have faith in money, trust in the law, hope for their future, and pride in being American.  In fact, my greatest fear is that nothing will happen, no blow-up, no "justice", no realignment but instead just more of the same.  I hold out what little optimism I have for Americans to remember what is great about our nation and cull that that is so antithetical to what we hopefully stand for.<Rant off>

mynhair's picture

Destroy the System!

Re-Elect ODummer!

I Got Worms's picture

Good rant. I am a 4 years younger version of you.

spinone's picture

Suffer in silence.  Cherish and nurture your rage.  Prepare.  Keep a low profile and stay away from crowds.  Find like minded individuals.  Keep a list of names, crimes, address, and known accomplices. Wait and be patient for the correct moment, if it comes, which it might not.  But it might.  Timing is everything.


InconvenientCounterParty's picture

Your core values are at odds with the values of predatory machines and traitors that serve them.

It's a dangerous time for you in the belly of the beast, but clarity of spirit and conscience are a surprisingly strong defense.


hambone's picture

Thanks all - I'm sure much of what I write is correct and some undoubtedly is wrong.  Glad to have a forum to share my ravings....unfortunately I am in a minority of one among my co-workers and friends regarding my beliefs.  I'm not attempting to convert or even converse about the issues that I feel are so central to our present and future.  Not that they neccessarily disagree, they just haven't a clue what I'm talking about (sorta like RP w/ the general electorate).   Helpful for me to visit w/ others likewise operating on the fringes of "conventional wisdom" and the "herd".

Omen IV's picture

you said it well - i am negative also but just this week i am starting to look at it all differently - the fraud is so pervasive and so deep everywhere not just government but all facets of every day living which to me is a turning point

as in the market when everyone is fully bought there is no one to buy anymore and the market goes south - i think many people see the same thing and there must be record levels of cash - no one wants to risk being defrauded so the system is stopping - velocity going to nothing  

i was at a lecture sponsored by publica tonite at the tenament house -on orchard street - with a harvard doctor and two pulitzer prize winning journalists and  the place was packed -

the topic was the payoffs of doctors by the drug companies and how they funnel the money thru various vehicles in the billions to get their drugs prescribed with impunity - massive operation - people see it and are now reacting  - just one small area of where the system is gamed but it all is the same everywhere - we may be at a turning point  



SRV - ES339's picture

Nice rant hambone!

Buy silver... visit your local OWS protest and offer your support (be very suspicious of the hippy/anarchist meme approach to the divide and conquer game)... turn the rant back on and never turn it off, no matter who you're with!

Wecome aboard.

Bwahaha WAGFDSMB's picture

Take this one and put it in the textbooks.  Perfect example of a lone wolf domestic terrorist here.  So are you gonna man up and become a self appointed judge jury and executioner?  Don't answer that, just watch your step.  There must be someone at the FBI who reads Zerohedge.

hambone's picture

really???  I'll tell that one my sons basketball team I coach, to the carpools I drive, to my wife in bed tonight.  Good stuff. 

Don't know where judge, jury, or executioner comes from...remeber the guy who flew his plane into the IRS building in Texas?  probably not and likely hardly anybody else does either...just a wasted life.  Nope, only way we'll change this around is changing the narrative, the conventional wisdom.  From what I see, tea party and OWS are both good starts but still seems too soon for the masses.

Bwahaha WAGFDSMB's picture

I'm just speculating here, but would not be the least bit surprised if you just bought yourself a spot on some high priority watch-list somewhere.

Access to resources: check, don't buy into the propaganda: check, pissed off: check, willing to sacrifice self for justice or some other ideal: maybe.  That's a lot of red flags there, and I'd say there's a better than average chance that ZH is monitored.

That fool in Texas couldn't even see who the real crooks are, couldn't see past the IRS.

If you ever do reach the point that you want to sacrifice yourself for whatever it is you believe in, self immolation is your best chance of making a difference.  It worked in Tunisia.  Don't kill innocent people, it's ineffective.

If I could start a meme that would be it.  Self immolation works, killing innocents doesn't.

RiverRoad's picture

Take heart hambone; it was folks thinking just like you who built this country in the first place.  And who will save it in the end.  Forget the trolls.

Freewheelin Franklin's picture



But you want real change? Real freedom from those who would impoverish and abuse you for their own benefit? Well, if you’ve been reading my stuff for very long or thinking for yourself since you escaped the government propaganda camps, you know exactly where to find it. If you don’t, then here’s the Big Clue:


YOU are the one thing that government and their Siamese twins in the financial world can’t manipulate, can’t “reform,” can’t control. Your independent mind and your intelligent desire to live separately from their concepts are the most powerful freaking weapons in the whole wide world.


Can government and their incestuous siblings in power really, truly eff up your world? Oh my. It’s the one thing they’re absolutely great at. We always have to work around the damnable things they do, and it gets harder by the day.


But that won’t change if we do them the honor of throwing ourselves at them in protest. That just tells them we believe in their authority.


You want a real freedom revolution? Then go inside your own head and demand that you free you. Heavens, the influence you can have there! The change you can spark! It’s awesome.


You can just go in there and tell your ownself what it needs to do to be more free — and it happens. No v*ting, no protesting, no petitioning, no lawmaking required.


Do the details get complicated? Of course. That’s the nature of the real world. Will outside influences always try to keep you from thinking and living free? Yes. Does individual freedom (as opposed to the eternally elusive ideal of political freedom) require hard, sometimes frustrating, work? Do bears sh*t in the woods politicians sh*t on reality?


Yes, what’s ahead of us is difficult. But it’s difficult no matter what we do — whether we hang our heads and comply, whether we v*te, whether we protest in the streets — or whether we build a homestead, build our skills, build a Good Bad Attitude and establish a freedom bulkhead in an unfree world.


The question is, are you going to give your mind and your life to outsiders, hoping those outsiders — who fundamentally don’t give a damn whether you live or die — will eventually change in your favor? Or are you going to give your mind and your life to you, your ownself — to do with as you think best?




I've been diggin on some Claire Wolfe recently


JPM Hater001's picture

We should be together. You are my perfect twin. We are like...made from the same cloth.
Both 41... Tell me you are a Sagittarius

AldousHuxley's picture

you should be worried because top 400 richest will now go after top 1.5 to 0.1% high wage fatcats...they are done with blue collar, they outsourced white collar, they will go after gold collar....


Plus you have kidS. Unless they have a massive trust fund, their future will be in ruins.

russki standart's picture

Hambone, thank you for a most eloquent rant.....wish I could have said it so well.

ffart's picture

Wait what, did the article say that you can cancel a trade if it turns out to be worthless?

Lady Heather...UNCLE's picture

How big a donor (political) is this prick?  That alone decides his fate

Godisanhftbot's picture

  Mr P runs a very tight ship, unlike Corswine. If he's a prick, then the list of non-pricks is very short indeed, and YOU might not be on it.

defencev's picture

Interactive brokers is probably the best brokerage in US. Provide access to a number of international markets and currencies.

I am pretty sure that all allegations against P. will prove to be total bullshit (and face it: a lot of bullshit is posted on this website).

DeeDeeTwo's picture

Peterrfly is the best of a rotten bunch. But even Good Guys need a mansion on a hill with 23 bathrooms, baby.

Godisanhftbot's picture

 Guess Mr P didnt realize Corswine was a complete miscreant.

 I suspect any buying came well before any takeover was contemplated.

 Mr. P does not need the money so badly, and this is a drop in the bucket. You will be financing much of the loss through a tax loss deduction, so Mr P thanks you.



jcaz's picture

"drop in the bucket, don't need the money..."

Yeah, that's what RajRaj said, too.....

MissCellany's picture

Guess Mr P didnt realize Corswine was a complete miscreant.

Hey, now, don't you go hatin' on MsCreant like that!

rubyruffruff's picture

huh???? mr. p???? u an ib employee or drank 2 much of the horse urine koolaid.....if the charitable mr. p didn't need the money then why the fk did he move on 8mil. shares for the pa acct jerko......more benevolence from the good ppl at ib????......as for the drop in the bucket statement.......did tht whacky bitch martha stewart go 2 jail for few hundred thousand?????....peterffy's greed was the driver for his purchase.........ur good buddy mr. p was trying 2 jack....mmmmm.....let's say $10 if he avg'd in arnd $5 a share.....so if 80 mil is sumthing u and  mr. p does really need

rubyruffruff's picture

huh???? mr. p???? u an ib employee or drank 2 much of the horse urine koolaid.....if the charitable mr. p didn't need the money then why the fk did he move on 8mil. shares for the pa acct jerko......more benevolence from the good ppl at ib????......as for the drop in the bucket statement.......did tht whacky bitch martha stewart go 2 jail for few hundred thousand?????....peterffy's greed was the driver for his purchase.........ur good buddy mr. p was trying 2 jack....mmmmm.....let's say $10 if he avg'd in arnd $5 a share.....so if 80 mil is sumthing u and  mr. p does really need

lizzy36's picture

Well MF global did pay bonuses in the US and the UK hours before it filed for bankruptcy (confirmed by the WSJ). 

So really all parties involved continue with business as usual. 

The only thing these markets have locked in is MORAL HAZARD.

Now chase that rally.....rainbows and unicorns, baby!

Panafrican Funktron Robot's picture



GoldmanSux's picture

Really? I didn't see that. That is fraudulent conveance.

Blano's picture

Aren't those therefore clawbackable??  (I know that's not a real word)

RiverRoad's picture

If you can pay yourself a bonus before filing for bankruptcy why can't cha write a book after payin' for yo' crime????

JPM Hater001's picture

LOL...for a second there I thought they were going to let one of the 1%fail.

Zola's picture

Of course the SEC will look into it , after all isnt the SEC : Slumbering Extremely Concerned ??

Dr. Engali's picture

If an insider commits a blatant act of fraud inside the SEC .. Will anybody hear it?

jekyll island's picture

Wouldn't it be poetic justice if he went to jail for insider trading on a trade that lost him millions?  Snowball's chance in hell of that happening. 



Rainman's picture

...mighta been his short hedge pocket money...always look for the other side with the bilzonaires

mayhem_korner's picture



Randolph and Mortimer strike again!

jcaz's picture

Eh, lose this one, don't go to jail-  of course he won't bitch too much, lol.

tasmandevil's picture

All he did was buy the effing dip..