MF Global fired all 1,066 of its brokerage employees on Friday, triggering anger and resentment about the firm's collapse after bad bets on European debt under former CEO Jon Corzine's leadership.
How the abrupt, final blow was delivered upset many staff — with some learning by e-mail and others through news on the television.
"Fifteen years and no severance!" shouted one angry MF Global employee as he left the firm's offices on 5th Avenue in Manhattan after hugging the receptionist and doorman.
The trustee in charge of liquidating the brokerage said in a statement that the workers were let go immediately, though they will be paid through Nov. 15 and up to 200 will be rehired to help with the wind-down.
The timing couldn't be worse for the employees. Not only is the U.S. unemployment rate high at 9 percent, other Wall Street firms have been firing staff in recent months as trading profits decline and tighter regulation takes hold.
"The lives of so many people have been disrupted. We did not even get told individually, we got a group e-mail," said MF Global analyst Pierre-Yvan Desparois outside the company's offices in Manhattan.
"The company had a lot of potential, it did not have to end like this. I'm a credit analyst and I could have told Corzine not to invest 100 percent in the sovereign debt situation. He placed bets with people's lives," said Desparois.
A middle-aged man who said he had worked for MF Global for 23 years but who declined to give his name left another of the firm's New York offices wearing a black t-shirt over his collared shirt that was laced with profanity.
At the Chicago Board of Trade, one MF Global employee sat in silence after a Reuters reporter told her about the mass layoffs. "No, I hadn't heard yet," she said, after a moment.
Asked about colleagues who were let go earlier this week, she said some have put on a brave face about landing another job. "But I told them, this is totally different because people are finding it hard to find jobs for 12, 18 months."
The criticism of Corzine was echoed by Todd Thielmann, a broker with MF Global in Chicago.
"His ego has ruined a lot of lives," said Thielmann. "It was more about the execs at the company than the grunts."
Another employee who worked in market data at the firm in New York for three years said she would have never left. "It was a great job. The camaraderie, the company was great. But people at the top let us down. It came as a complete shock," she said.
Not every employee saw the pink slip e-mail, and not everyone was surprised.
A broker in Chicago learned about the termination through news reports and said employees were being called into meetings as the media began reporting the development.
"When you are working for a company that is bankrupt, you know it's coming," said an MF Global broker who attended a 20-minute meeting in New York.
MONEY STILL MISSING
The firings come as the trustee, James Giddens, works to identify and locate the brokerage's assets, including $600 million in missing customer money that has frustrated and confused commodity-market traders.
MF Global's main U.S. exchange regulator, CME Group Inc., said Friday it will provide a $300 million guarantee to prod the trustee into releasing frozen customer funds. For the first time, CME tapped a slush fund for about $50 million to help offset any losses to futures traders stemming from the failure.
Giddens is trying to account for all of MF Global's assets with help from forensics investigators at Ernst & Young. The trustee said he has also retained Deloitte to help with the transfer of about 17,000 commodities accounts worth roughly $1.5 billion.
Federal agencies, including the Commodity Futures Trading Commission, the Securities & Exchange Commission and the Department of Justice, are investigating whether the money missing from customer accounts may have been improperly mixed with the firm's funds.
Giddens was appointed to liquidate the brokerage after MF's parent company declared bankruptcy on Oct. 31.
The bankruptcy shocked Wall Street, in part because the company was run by former New Jersey Governor and Goldman Sachs head Jon Corzine, who advocated for tough regulations on Wall Street firms during his political career.
Corzine resigned last week, saying he would not seek about $9 million in severance.
SOME WILL BE REHIRED
Between 150 and 200 of the MF Global brokerage employees will be rehired to help with winding down the business and processing bankruptcy claims, Giddens said in his statement.
"The termination of employees and closure of operations is a necessary part of the court-ordered liquidation ... and is consistent with the trustee's obligations," he said.
The parent, MF Global Holdings, said in a statement that it was "saddened by the trustee's actions today to terminate so many of our colleagues."
Giddens also said on Friday that his team is working to clear out the brokerage's New York offices as soon as possible and rent smaller, less expensive space as the liquidation moves forward.
MF Global's Chicago offices will continue to be leased for an undetermined amount of time, he said.
As for the employees, they are heading off into the great unknown.
"We were down to eight people on the floor and only two of them have found jobs," said Thielmann, who plans to start over as an independent broker in the corn options pit trading floor of the CBOT.
"I'm on my own now but it's going to be really hard to get customers. They're scared, they've taken any excess money out of all firms now and they don't know who to trust. Customers are pulling funds out of accounts, that's bad for liquidity and bad for markets," he said.
The brokerage liquidation is In re MF Global Inc., U.S. Bankruptcy Court, Southern District of New York, No. 11-2790.
MF's bankruptcy case is In re MF Global Holdings Ltd., in the same court, No. 11-15059.
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