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Finance & Accounting
Pages 3 (753 words)
Name: University: Course: Tutor: Date: Finding Transparency in the MF Global Fraud MF Global was a commodities and securities brokerage firm that started operations in the late 1700s as a sugar trading and export company (Bunge 2). MF Global suffered a man-caused financial disaster during the last week of October 2011…
MF Global and its parent holding company (MFGH) were forced by federal regulators to file for Chapter 11 bankruptcy protections on October 31, 2011 (Bunge 3). Within the span of less than a week one of Wall Street’s pinnacle trading firms was reduced to heap of broken promises and over one billion dollars in missing investor and client assets. After the MF Global bankruptcy was filed, investigators from the Securities and Exchange Commission discovered that a subsidiary of MF Global, MFGI, had improperly “booked” commodity trading transactions that exceeded the margin capability of MF Global to repay (Arends 14). The nature of this and how it was orchestrated and hidden by MFGI and MF Global executives is the focus of this paper. MF Global was in the business of facilitating futures trading (USCHC on Financial Services 81). If a customer opened a position on a commodity, MF Global was required to post the margin required to hold that position on the contract exchange. For the most part, the amount of margin required was determined using a standardized algorithm called the Standard Portfolio Analysis of Risk (SPAN) (USCHC on Financial Services 102). ...
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