Former MF Global CFO describes her concerns that clients’ funds were at risk - The Washington Post

By David S. Hilzenrath, Published: March 27

Days before the MF Global brokerage firm collapsed, leaving many of its clients without access to their money, a top executive was troubled that the firm appeared to be putting customer funds at risk, the executive says.
In testimony prepared for a Wednesday hearing, the firm’s former chief financial officer, Christine Serwinski, says she learned that there was “a substantial deficit” in a financial buffer that was supposed to ensure that customer funds were safe.

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March 26 (Bloomberg) -- Neil Barofsky, former special inspector for the U.S. Treasury's Troubled Asset Relief Program and a Bloomberg Television contributing editor, talks about a Bloomberg News report that Jon S. Corzine, MF Global Holding Ltd.'s former chief executive officer, gave "direct instructions" to transfer $200 million from a customer fund account to meet an overdraft in a brokerage account with JPMorgan Chase & Co., according to a memo written by congressional investigators. He speaks with Erik Schatzker and Stephanie Ruhle on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

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March 26 (Bloomberg) -- James Koutoulas, chief executive officer of Typhon Capital Management and president of the Commodity Customer Coalition, and Douglas Burns, a former federal prosecutor, talk about an internal e-mail from MF Global Holdings Ltd. employee Edith O'Brien linking former CEO Jon Corzine to the transfer of funds from a customer account to meet an overdraft with JPMorgan Chase & Co. The Commodity Customer Coalition was formed out of the liquidation of MF's brokerage. Burns and Koutoulas speak with Erik Schatzker and Stephanie Ruhle on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

When she asked why there was a shortfall, she learned that one part of MF Global had borrowed money from another “and had missed the wire deadline to pay it back,” Serwinski says in the testimony.
Such “intraday” lending was not unusual, Serwinski says, “but the loan should have been paid back before” the previous day’s close of business.
Over the next several days, the sinking parent company, headed by former U.S. senator and governor Jon S. Corzine (D-N.J.), struggled to stay afloat and to find a buyer. Then, in the pre-dawn hours of Monday, Oct. 31, MF Global told regulators that money was missing from customers’ accounts, the sale fell apart, and the parent company sought bankruptcy protection.

Read full article here Former MF Global CFO describes her concerns that clients’ funds were at risk - The Washington Post