MF Global Admits Diverting Customer Funds In Violation Of Law
The investment firm headed by former New Jersey Governor Jon Corzine has apparently admitted that it illegally diverted customer funds as its financial position was collapsing:
MF Global Holdings Ltd. acknowledged to federal regulators that money had been diverted out of customer accounts in violation of futures rules and law, according to a federal official.
The Wall Street brokerage, which filed for bankruptcy protection Monday, acknowledged the shortfall amid mounting questions from regulators as they went through the firm’s books while trying to facilitate a sale to Interactive Brokers Group Inc., the official said. Regulators still don’t know where the customer funds went, who directed the move or how widespread the practice was, the official said.
Regulators are still working to determine whether MF Global had a continuing problem with handling customer funds or if executives diverted funds as the company’s financial situation deteriorated and grew more desperate, the official said.
This is a potentially huge deal, with possible criminal charges for top executives depending on their level of knowledge of what was essentially fraud. Whether Corzine was involved in this or not is unclear, obviously, but one would assume he’ll be a primary target of investigators.