MF Global (former Lind Waldock) Bankruptcy

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#1 Wed, Nov 2, 2011 - 11:48am
Daedalus Mugged
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MF Global (former Lind Waldock) Bankruptcy

Thread to discuss issues and effects of MF Global's bankruptcy. Please share your stories as well as any information about communications from SIPC or MF or any successor company.

I called on Friday (before bankruptcy) and got the 'all is well, your account is safe' spiel. The cash is in an FDIC insured trust at a bank. I had no open future positions, but I did have a silver certificate (a future taken to delivery, so specific serial number bars held at the comex warehouse). I took it to delivery to check if there was a 'silver shortage' I wanted to see if the person on the other side of the trade offered some sort of premium to cash settle...they did not. When I asked about how it was protected, I was told it was 'in my name' not in MF global's so no matter what happened I was protected.

A broker called Monday (technically after the BK filing) and recommended I sell a November future to net against it. His reason was that the certificate may be considered an asset of MF Global, and the creditors may sieze it, sell it, and leave me as a creditor to the bankruptcy rather than as a customer of the brokerage. The exact opposite of what I was told the business day prior. So I sold the future.

Assuming that trade net settles with the certificate properly, I will have only cash at the broker. I have asked about removing cash from the account balance, and didn't really get an answer.

My understanding is that the brokerage assets will end up going to SIPC and then hopefully full cash reimbursement there, although that is from internet reading, not from any official communications.

Did anyone have accounts at some of the other institutions that went boom like Lehman or Bear?

Edited by: Daedalus Mugged on Nov 8, 2014 - 5:16am
Fri, Nov 4, 2011 - 11:12am
Daedalus Mugged
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MF Bankruptcy Article

So my effort to eliminate counterparty risk by taking comex delivery failed...I wasn't looking out for brokerage failure risk. After fleeing NJ to escape the (further) damage Corzine did there, I should have known enough to bail as soon as MF bought LW.

I have gotten nothing official from MF. The most useful article I believe I have seen is from Reuters: https://www.reuters.com/article/2011/11/03/us-mfglobal-margin-idUSTRE7A27Y020111103

It essentially says that accounts will be transferred from MF to 6 smaller brokerages. It seems like the positions and accounts will only go with about 60% of the collateral, which will likely mean immediate and significant collateral calls on most of the clients. That could lead to significant market turmoil. It gives no color as to how the accounts will be allocated between the various brokerages, nor whether clients have any say or preference in where they get allocated. It is also not clear whether every client will come with the same percentage of collateral missing or whether it will track by which clients' money MF Global actually stole.

The article does seem to offer hope that clients will be made whole with time, but that will be cold consolation to those who were blown out of positions due to collateral shortfalls in the meanwhile.

Sat, Nov 5, 2011 - 3:11pm
Caracal
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My cash is tied up, no end in

My cash is tied up, no end in sight. Ignore all the stories out there, there is only one legit site;

www.mfglobaltrustee.com

Sun, Nov 6, 2011 - 9:28pm
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pasted from mainstreet

Quote:

MF GLOBAL

Submitted by rss on November 6, 2011 - 8:19pm. Hat Tip! 6

The fiasco continues-Besides all of the confusion over margin, requirements, it is impossible to trade. MF Global has transferred most accounts to RJO. It took forever to get logged onto RJO's site to see how funds transferred, yet I could find no trading screen on their site. I called and they said they cannot do any trading for you yet--you are supposed to used the old MFG system for this.

The MFG site says to use this site for trading (it did)

You log onto the MFG site, and it is non-functional. Call the MFG broker and he says he can place night trades for you but he cannot see the screens because the system is down.

An hour ago I was able to log in and sold some positions on the web-site, but when the fill info. comes back it says to check your activity screen for fill information. You check this and it is the bridge to nowhere--nothing there. Call the MFG guy and he can neither confirm or deny that these trades took place because his screens are down. So now it is more confusing than before.

I have no idea as to whether or not I sold anything, no one can confirm anything. They give you a night desk number, but their systems are down also.

You couldn't have f'd this up any better if you tried, but, actually it is exactly how I told my spouse it would probably be earlier in the day. Sinister forces are at work all over here.

A mountain tree, if it would see, the far horizon and the stars May never know a sheltered place, nor grow symmetrical in grace Such trees must battle doggedly, the blasts and bear the scars. - by Marion Loyal Thompson
Sun, Nov 6, 2011 - 11:11pm Stormdancer
Caracal
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If you had cash, its gone...

If you had cash, its gone... it doesnt show up anywhere, and you cant see it. The way that the CFTC, and the CME have managed this is absolutely ridiculous. No one can tell me where my money is, and they keep telling me to go to the trustee website for the SIPC forms, that have yet to show up.

Poorly handled.

I have no idea how much Ill get back, or when that will happen, and no one seems to have any answers, a week after this started!

Mon, Nov 7, 2011 - 11:03am
Daedalus Mugged
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Same here

I was directed to the trustee site to 'fill out a claim' but I can't find one on there.

On Monday (hours after bankruptcy) my broker called and advised me to sell a future against the silver delivery certificate to flatten my position. I did. After several unanswered voicemails over the week, he finally calls me this morning, tells me my short position along with 80% of the necessary margin has been transfered to RJO, but the delivery certificate and the rest of my cash was kept by the trustee. So I need to either post collateral to RJO or sell the position (for a nice >$1k loss). I sold and should now have only cash at RJO, and no idea when or how I get my silver certificate back.

Mon, Nov 7, 2011 - 12:49pm
Caracal
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The form they talk about is

The form they talk about is an SIPC claims form, that hasnt been put up on the site yet. They will be releasing the amounts finalized by the end of tomorrow ...according to the CME

https://www.futuresmag.com/News/2011/11/Pages/CME-puts-hold-on-.aspx

Mon, Nov 7, 2011 - 12:55pm
Woody Mornings
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MF Global clients now have

The following can be found here..... https://www.futuresorders.com/ticket/create/lindrd

"MF Global clients now have trading access. Log in using your existing account number and password. View our FAQs for common questions about your MF Global account, and contact your existing trade desk or broker for further questions. (www.rjobrien.com/mfgindividuals)"

I can't login to my account (which was flat) at mfg's site or rjo.

Mon, Nov 7, 2011 - 12:59pm
Woody Mornings
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Trustee website question

Do the links on the trustee's site work for anyone?

They take me to a blank untitled page.

https://dm.epiq11.com/MFG/Project/default.aspx

Mon, Nov 7, 2011 - 2:50pm
Caracal
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All the links work... and

All the links work... and there are some new developments today on that site... more crap, nothing of real substance.

Tue, Nov 8, 2011 - 8:44am
Caracal
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Daedalus Mugged, I believe

Wed, Nov 9, 2011 - 6:34am Caracal
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Thanks Caracal

I was checking the trustee website, not the CME group. Thanks for the pointer.

Wed, Nov 9, 2011 - 9:22am Daedalus Mugged
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MF Global Forbes acct'ng article

https://www.forbes.com/sites/francinemckenna/2011/11/09/mf-global-assets-...

"Almost everyone wondering where the missing MF Global customer assets went thinks they will show up eventually.

I believe the assets are long gone.

Unlike the shell game, there is no bean under the MF Global dixie cup. The mixed bag of marketable securities taken from customer segregated accounts, used most likely to meet margin calls and satisfy “important” customers closing accounts during the last days, will, in my opinion, never be seen again."

Wed, Nov 9, 2011 - 1:02pm D E
Silver Monkey
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I feel horrible for those that are involved in this mess

Obviously you guys are concerned heavily with your cash as well as the transferred positions. I am very curious about the open trades that were all supposedly going to be liquidated by now? Has that happened? What's the latest with this?

Wed, Nov 9, 2011 - 1:10pm
bern
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... About $593 million in

...
About $593 million in commodity customer funds are unaccounted for, according to a person with knowledge of regulatory probes into the failure of the New York-based firm.

The trustee liquidating the brokerage, James W. Giddens, has transferred 17,000 accounts to other firms, out of 50,000 commodity accounts that he said he would relocate, while releasing almost $1.6 billion in collateral, said Kent Jarrell, his spokesman. Many remaining accountholders may have to file claims for their assets, which have to be shared fairly with other claimants, Jarrell said.

Unless the missing cash is found, people hoping to recover 100 cents on the dollar may have to give up some of it to other customers, Harbeck said yesterday a phone interview.

“Giddens can’t let out more than a low percentage of assets before he knows what he owes to all commodity customers,” Harbeck said.
...
Customers of MF Global are asking when they’ll get their cash back, according to e-mails to Bloomberg News. If they have to file claims, the trustee must first get court approval for a system to handle claims and mail forms, Jarrell said yesterday in an e-mail.

A trustee’s duty is “to identify and marshal assets available to satisfy customer claims and to maximize the estate for all stakeholders in an orderly and fair process,” he said.

Commodity accounts that haven’t been transferred, along with securities accounts, will “most likely be subject to the claims process,” he said. Giddens is trying to find brokers to take “bulk” transfers of security accounts, Jarrell said.
...

https://www.bloomberg.com/news/2011-11-08/mf-customers-may-have-to-share-cash-unless-missing-funds-found-sipc-says.html

PM Bug
Wed, Nov 9, 2011 - 2:54pm Silver Monkey
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Re: Transfered position

I can speak only for myself. I had a delivery certificate and future short against it for a net flat position. MFG kept the delivery certificate (long) and most of the cash and transferred the short future position to a new broker along with 80% of the required collateral. On Monday, I either had to post the rest of the required collateral, flatten the position or be liquidated. I flattened.

I would think that for those whose accounts were transfered, they have either already sent in the required margin to maintain the positions, flattened or been liquidated by now. To the extent there was market disruption, it was Monday/Tuesday.

Thu, Nov 10, 2011 - 10:31am
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http://www.zerohedge.com/cont

https://www.zerohedge.com/contributed/customer-and-creditors-guide-mf-global-bankruptcy-background-what-needs-be-done-pronto

As I suspected, it seems the *missing* funds were taken by one of MFG's 1st secured creditors. What I didn't know until reading the above, is that it was JPM.

In other words, in exchange for the use of $8 million in cash, JP Morgan may get to keep any and all assets it may have withdrawn from MF Global within the last 90 days, whether they be thousands or billions, which would have otherwise been subject to investor claw-back lawsuits.

​I fear that people who had cash in their accounts will never see it.

Thu, Nov 10, 2011 - 2:06pm
Jen
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Penson

Yesterday, Penson Worldwide, my clearing firm, had its credit downgraded by S&P. I noticed that the stock PNSN has a pattern that looks very much like that of MF over the last few years and it traded at $0.93 today. An earlier downgrade of PNSN was reported to have caused pressure on MF on August 5. Penson is apparently very highly leveraged. Does anyone know more about this? It sure seems like we are in for much more trouble in the paper markets!