the humble libertarian

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Monday, April 23, 2012

MF Global Bondholders Feel Duped, With Good Reason

MF Global's investors and customers were defrauded. Fraud used to be a crime in America but these days crime really does pay.
Much has been written about the $1.2 billion that remains missing from the accounts of MF Global Holdings Ltd. (MFGLQ)’s customers, one of the most egregious violations of trust on Wall Street at a time when confidence in the behavior of financial executives is extremely low. Less discussed -- but equally outrageous -- are the losses suffered by bondholders who feel they were duped by MF Global executives during the summer of 2011 into investing $650 million. MF Global executives told these investors that everything at the company was just fine when, in fact, capital and liquidity were in devastatingly short supply....What in August 2011 was worth $650 million is now valued at about $227 million, a staggering loss of around $423 million in a matter of months. It’s true that in the annals of Wall Street, creditors have suffered bigger losses -- Lehman Brothers, anyone? Yet, for sheer speed and chutzpah, the actions of MF Global’s management may stand alone.
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Judy Morris,
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