MF Global Holdings Ltd. (NYSE:MF) ended the week with another round of bad news.
On Friday, MF’s regulator CME Group Inc. (NASDAQ:CME) pledged $300 million to help accelerate the release of customer cash and other collateral from MF’s bankruptcy. The money comes from a financial guarantee to the trustee overseeing MF’s liquidation and it will give him “greater latitude” when dispersing funds to the different angry parties.
CME CEO Craig Donahue said of the action:
“We recognize that the U.S. Bankruptcy Code requires the trustee to account for all customer assets and claims to ensure a fair, pro-rata distribution of those assets, and we sincerely appreciate how complex this task is for the Trustee,” said Craig Donohue, chief executive of CME, in a statement. “We believe this extraordinary measure is necessary to ensure that all customers are treated fairly during the unique and challenging circumstances surrounding the failure of MF Global.”
In addition to helping make customers whole, some additional assistance may be appreciated by the 1,000-plus MF employees fired on Friday. The laid-off employees will not receive severance pay, deferred compensation or bonuses but they will receive health insurance through the end of the month and salaries through November 15.
Fortunately for 150-200 former employees, they will be rehired to help tie up loose ends of the dying company and process bankruptcy claims.
The case of the firm’s missing $600 million also continued this week. On Thursday, Bart Chilton, a commissioner from the U.S. Commodity Futures Trading Commission (CFTC), called the money a “massive hide- and-seek ploy.” He added, according to a Bloomberg article,
“It’s a distinct possibility, some would say probability, that somebody has done something with the money, and that it’s not going to be ‘all of a sudden discovered’ with an innocent explanation,” Chilton said. “If that’s the case, it’s patently illegal. I don’t know yet. Our investigation will uncover that, and we’re aggressively pursuing this.”
The firm’s cash movements are currently being investigated by the U.S. Justice Department, the CFTC, the Securities and Exchange Commission and the bankruptcy trustee’s staff.
Investing Insights: Will Gold Offer Protection from a Thanksgiving Feast?