MF Global Client Theft Estimate Doubled To $1.5 Billion?

Tyler Durden's picture

Even as we hear rumblings that the MF fire is spreading, and the associated auditor of the now infamous former Primary Dealer is about to get in serious hot water, the bankrupt company itself continues to dig itself an ever deeper grave. Because according to a just filed motion by the MF Global liquidating trustee, it seems that the gross criminal activity by the company may have been orders of magnitude bigger than anyone has expected. To wit: "As a result of the apparent segregation violations and the suspension of clearing privileges, more than 150,000 customer accounts essentially were frozen on October 31, 2011, of which more than 50,000 accounts were regulated commodities customer accounts. The CME estimates that MFGI’s current segregated funds requirement is approximately $5.45 billion. Moreover, the total amount of MFGI customer segregated funds on deposit at the CME is approximately $2.5 billion, and the clearing-level segregated collateral is approximately $1.5 billion or approximately 60 percent of the MFGI customer segregated funds on deposit at the CME." Doing some quick inverse addition and we get a (w)hole of $5.45 less $2.5 less $1.5 or $1.45 billion. In other words, the theft by MF Global was not stealing hunderds of millions form its customers: it has stolen a whopping $1.5 billion! For those confused, this is not a rogue loss of $1.5 billion, something which was enough to send UBS' Kweku to prison. This is outright theft resulting from illegally commingled accounts. Our only question is will $1.5 billion in theft be enough for the first real perp walk of an Obama-friendly Wall Street executive?

And here is Reuters with a revised lowball. Remember this number was supposed to be zero earlier today. 

MF Global had a $633 million
shortfall in its customer segregated funds as of Nov. 1, according to an
estimate the CME Group provided to the U.S. futures regulator.


That amounted to an 11.6 percent deficiency.


In the letter dated Nov. 2, the Commodity Futures Trading Commission
said the CME has identified futures commission merchants (FCMs) willing
to accept transfer of MF Global customer segregated account positions of
retail and institutional customers.


The futures regulator also
said that CME anticipates that MF Global customer segregated account
positions will be transferred to two or more of five identified clearing


MF Global, which filed for bankruptcy protection on
Monday, is the biggest U.S. casualty of Europe's debt crisis, and the
seventh-largest bankruptcy by assets in U.S. history.

When all is said and done, the shortfall will be well over a billion.

h/t Doug

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TruthInSunshine's picture

Michael Clayton is in Corzine's kitchen as we read this.

gangland's picture


more like barry's shug knight...aka..otherwise known as joe yamookaah biden

Western's picture

This whole situation makes me sick to my stomach, and I'm sure as fuck glad I'm not a current/former/ever MF customer. Just trying to empathize with the victims.


I often fantasize about shooting people like John Corzine in the head. I've never killed anybody, but I probably wouldn't be haunted if I just up and did him in right this minute.

topcallingtroll's picture

Corzine needs to go to prison and be someone's azz slave just because he is Corzine. I hate the guy. Typical sanctimonious rich democrat.

ZeroHour's picture

I don't know DoChen, the earth is pretty big and he's competing with quite a few POS's from Washington, NY, etc.

A top ten list can't be created because you can't squeeze several hundred in there.

Fukushima Sam's picture

Aw, common, everything's fine.  What's $1.5 billion between friends?

peekcrackers's picture

1.5 billion public lashing  for the the theft .. would be a nice start

Careless Whisper's picture

Only rogue traders get the perp walk.

BurningFuld's picture

Plus USGov will cover this. I mean USTaxpayers will cover this. Man....Bamie's got your back Dudes. Don't sweat it.

Don Birnam's picture

Troll, flawlessly logical and beautiful in its simplicity: Just because he is Corzine.

Two thumbs up. Way up.

Ned Zeppelin's picture

You're right - he's almost as bad as the typical sanctimonious rich republican. 

inca's picture
Jim Stone visits Occupy LA

Since I was displaced by the recent disaster, and live in Southern California, Occupy Los Angeles ended up being an obvious destination.
I went to Occupy LA with an agenda of uncovering infiltrators into the movement who seek to undermine it, and get the real word out - it is a foregone conclusion that the mainstream media would lie about everything.

I had enormous success with both things,

To start;

The "official" representation for Occupy Los Angeles may have been usurped and appears to be intentionally not getting the word out about what the movement actually stands for. I was invited to join the media team but refused after seeing the media tent, which despite having several Macintosh computers and at least 10 windows based laptops as well as innumerable cameras and a full time broadband connection, had failed to output ANY video in three weeks (as of Oct 24) other than a three minute clip from a flip camcorder. This was discussed during a media meeting which I attended on October 24.

Many media outlets have stated Occupy Los Angeles has no direction. But after being on site for four days, I can clearly state that there is a strong direction and strong demands are being made, demands which get usurped by the powers that be who are on scene and claim to be part of the movement. One pass through that camp will reveal a powerful resolve and message; a message which has been stifled, and I have proof of that here in photos. The demands are:

1. An end to the banker bailouts and an end to centralized PRIVATE banking (Federal Reserve). This is very closely followed by an end to all forms of corporate welfare and "buying" of electoral candidates by corporations.

2. An end to insider trading and favored status being given to investment firms like Goldman Sachs.

3. Media accountability - the movement is well aware of the fact that it is a few families of a particular (small) religious group that owns the media, which during elections especially, and at all other times publishes only information which serves a handful of "elite". They want candidates to represent themselves without the boost provided by media bias, from a fixed money pool drawn from public funds.

4. From this, they hope to accomplish their fourth objective - an honest government that does not go around killing innocent people in foreign nations every time the will of the "elite" banking cabal is not served to it's extreme desire while robbing the people of their taxes and future to fund elite cronies in their financial scams. They do not want world government, this movement clearly sees the value in maintaining national soverignty. They want the old America back.

5. They want an end to the police state, over excessive law enforcement, government snooping in the electronic arena, de-criminalization of victimless activities, such as adding onto a home without a permit, running a generator without a permit, growing food without a permit, as well as the legalization of hemp. They would like to see the end of America's absolutely monstrous prison system which is mostly full of people who never actually did anything other than violate a law or ordinance which bans an activity that never involved anyone other than the individual performing the action. They believe prison should be for theives, rapists and murderers, and that it is impossible to deserve arrest for inaction, or action which involved no one else.

6. They want accountability for ALL corporations producing genetically modified foods, and focus especially on Monsanto. They want labeling of genetically modified foods to be MANDATORY, and an end to genetic modification altogether

There are also many affinity groups, such as animal rights, gay rights, women's rights, openly communist or socialist groups and trade unions, who have little to no representation (single tents) placed in prominent locations, the remaining 95 percent of the movement stands for what is listed above. The site politics/CIA, infighting, ect will be discussed farther down the page. Overall the movement is composed of excellent people who seem to be defeating the odds.

more here

dlmaniac's picture

"Hmmm... How do I blame it on Bush, Republicans, Tea Party and so forth? Come on my prompter, show me a clue."

sun tzu's picture

Not a peep from CNN, MSNBC, ABC, NBC, CBS or any of the lamestream media except for the financial news outlets. Solyndra has been swept under the rug already. So has fast and furious. Obowow's media lackeys are pathetic and choose to sink with the ship rather than report the news

Don Birnam's picture

To wit: Mum's the word from former neighbor and just as liberal Democrat, the reprobate Jim Cramer.

But then again, Cramer had nothing to say when his "best buddy and pal" Eliott Spitzer went down ( in both the literal and figurative sense ).

The media fawns may circle the wagons of silence round Corzine, but I do believe he I'll be the one who will be sacrificed upon the scales of justice by his ( former) political the Executive Branch. FBI involvement makes this essentially a foregone conclusion.

There will be a perp walk. And it will be a duesy.

bbbilly1326's picture

"Corzine would have made a great treasury secretary"


whaddya mean "would have" ..........FIRE GEITHNER




Congress will understand that everyone makes a mistake now and then......a la Turbo Timmy -- he worked out OK right ?

Deadpool's picture

no Freudian confessions, please. There are thought police around, dontchaknow.

CClarity's picture

This "Emperor story" just posted in FT on Corzine.  British clever and worth a read.

Big Corked Boots's picture

That there is the funniest shit I've read in months! Thanks for posting1

Abitdodgie's picture

America is run by the mob and if you are in the family you do not go to jail , anyway do you really think TPTB give a shit about the people that lost money, they can do WHATEVER they want and nobody is going to stop them so shut up and get back to work so they can spend your tax money and carry on living the life of kings whilst you take a big bite of there shit sandwhich

fajensen's picture

If it is rich people's money then "they" do care: Bernie Madoff went to jail. 

fonestar's picture

Hard for me to sympathize with these people sometimes.  I wouldn't pay someone to think for me, which is basically what you're doing when you pay a fiduciary or money manager.

Strider52's picture

Doesn't "Corzine" sound like a drug name?

 When is a diet pill worth $130 a bottle? When it works. Introducing Corzine, the FAST weight-loss pill! Side-effects include:

  • Dry mouth, dry skin, dry arteries, dry brain
  • Urinary retention /pissing blood
  • Blurred vision / total blindness
  • Constipation, in some cases causing "full of shit" syndrome
  • Sedation (can interfere with driving or operating machinery, or standing, walking, breathing)
  • Sleep disruption (while thinking of jail)
  • Weight gain (laff)
  • Headache, evolving into massive strokes
  • Nausea, beyond dry heaves
  • Gastrointestinal disturbance/diarrhea/non-stop shitting
  • Abdominal pain (similar to a knife in the intestinal area)
  • Inability to achieve an erection (ever again)
  • Inability to achieve an orgasm (men and women)
  • Loss of libido
  • Agitation
  • Anxiety
  • Early Retirement
  • Instant Death 
MsCreant's picture

Jena below posted a version of Corzine the drug, too.

Freddie's picture

Yes and no.  This is a major big deal but post Obama there are no laws.  Yeah it sucked pre-Obama but at least we sort of pretended there were laws.

The system is totally corrupt but when people put money in a brokerage account like this - it is supposed to be separate with a custodian never to be touched or stolen.  Corzine and the whole exec teams should get 30 years in prison.   The "mistake" will be magically fixed. 

Elections have consequences.

ArkansasAngie's picture

There is no such thing as fiduciary responsibility any more.

The fact that these kinds of things are not bringing in the guys with guns and badges is becoming a criminal act in and of itself.

Washington ... if you can't find somebody to go to jail over this then maybe we need to start investigating Washington.

A rope is too good for'em.

And to think my little peon workers get arrested because they don't have proof of insurance.


fattail's picture

There is no fiduciary responsiblilty to not steal from your customers segregated accounts. 

Freebird's picture

Ok Western. Please go & get some help before returning here...honest to god

theMAXILOPEZpsycho's picture

Greetings! I'm just back from vaction. I have most of my net worth with MF global...whats this? you're glad you're not a customer; why has something bad happened?

Freebird's picture

Yeh, you posted again...asstroll

theMAXILOPEZpsycho's picture


Freebird's picture

Fckg Douchebag. No you cretin no exposure & take cretin as a compliment not an insult. Did you give yourself a green or what? Listen up & listen good - a lot of people take positions in attempt to hedge themselves against outright debasement or perhaps cover themselves in positions taken out a while ago. Is it funny that they could be victims of the latest scam? Do I hear no? Ok. So these people could have been smarter & looked at counterparty risks etc, but is this a reason to laugh at them Psychocunt?  


Long-John-Silver's picture

I often fantasize about shooting people like John Corzine in the head.


After 25 years of Military service I can't even begin to calculate the number of people to which I am directly and/or indirectly involved with the termination of their life. Adding one more would be of no consequence to my current mental condition. I would happily volunteer to be John Corzine's executioner. I would not even wear an executioners head covering if his execution was made a public affair. 

Freebird's picture

Have you offered up your services LJS? Amercia could use a new leader? 

russki standart's picture

Western, I understand how you feel but killing is a very bad idea. Better to send them to prison, penniless and disgraced, bunking with butt blaster  bubba. 

wisefool's picture

Absolutely. It is better to see them rot (caught or not) than let them feel a martyr. The interent record of these folks, including Paul "The face of Enron" Krugman is never going to go away. Let them stew in it.

NewThor's picture

If Cozine makes it to a country with a no Extradition policy.

I think that's a strong signal 2012 is less than 2 months away.....


Messianic's picture

I thought his nickname was "the villages"

legal eagle's picture

They will fix it, just an accounting error, that whole debit and credit thing is very tricky, just ask any college freshman

Poule Mouillee's picture

Are you thinking that a good German accountant could potentially find 55Billion on the other side of the ledger somewhere?

eurogold's picture

Only if he works for Price Waterhouse + Coopers !

Temporalist's picture

It was hidden under the wiener schnitzel he left on the ledger book.

101 years and counting's picture

not to worry.  the treasury has the clients' backs.  americans will reimburse them for the theft by MF and then let the entire executive team go.  some middle manager going down and going to be raped repeatedly in prison though.

Raskolnikoff's picture

as simple as making a wrong input on turbo tax software.

TruthInSunshine's picture

Someone in accounting forgot to carry the 1.