Federal regulators have found that hundreds of millions of dollars in customer’s money has been lost from MF Global in recent days, prompting an investigation company operations such as filing for bankruptcy on Monday, according to several people briefed on the matter.
The revelation of the lost money sunk 11 hour deal for MF Global to sell a major part of himself to a rival brokerage firm. MF Global, a commodity broker locomotives being run by Jon s. Corzine, has been lurking at the completion of the deal.
What started out as an almost $ 1 billion lost has been dropping to less than $ 700 million late Monday. It is not clear where the money goes, and the money is expected to arrive during the next few days as the company sorts through the bankruptcy process, the people said.
But regulators are examining whether the MF Global redirected the money customers to support their own trading as the company teetered on the brink of collapse. If it does, it violates a fundamental principle of Wall Street regulation: the money the customer has to be kept separate from the company’s money.