05 June, 2012

The last days of MF Global - The Term Sheet: Fortune's deals blog Term Sheet

The last days of MF Global - The Term Sheet: Fortune's deals blog Term Sheet: Where had MF Global gotten all the extra cash it needed in this crisis? By Wednesday, it had almost exhausted its emergency credit lines, which included two bank loans totaling $1.5 billion. It is also on Wednesday, investigators believe, that the firm started dipping into customer funds.

Safeguarding customer money is the holy of holies in the futures business. Under CFTC regulations, cash from individual customers is pooled and kept in special "segregated" bank accounts, where it is supposed to remain inviolate, even when a firm goes under. Industry groups routinely boasted that no customer had ever lost a penny because of a bankruptcy.