Federal regulators discovered that hundreds of millions of dollars belonging to customers has gone missing at former New Jersey governor Jon. S. Corzine's MF Global in recent days, prompting an investigation, The New York Times reports.
The missing funds were discovered during a last-minute attempt to sell part of the brokerage firm to a rival, which failed. MF Global had staked its survival on completing the deal but instead, the New York-based firm filed for bankruptcy on Monday.
Regulators are apparently looking into whether MF Global diverted some customer funds to support its own trades as the firm teetered on the brink of collapse, the Times reported.
Or it could reflect sloppy internal controls at MF Global. When first discovered, it appeared that some $950 million was missing, but as the firm sorted through its bankruptcy, that figure fell to less than $700 million by late Monday, the Times wrote. Additional funds are expected to trickle in over the coming days.
Regardless of whether more money surfaces, the discovery of missing funds violates Wall Street regulations: Customers’ money must be kept separate from company money. One of the basic duties of any brokerage firm is to keep track of customer accounts on a daily basis.
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