MF Global CEO (and former Goldman Sachs CEO, and former New Jersey CEO) Jon Corzine resigned this morning, which is what you do when your company goes bankrupt. Oh, MF Global went bankrupt earlier this week. We hope you’re getting your breaking financial news from sites that update every day.
Anyway, MF Global found itself in financial hot water after investing a few billion dollars in European sovereign debt, which sounds like a good idea if you’re not the kind of person that keeps up with current events. And not even sweet debt like Germany’s, either. They were heavily (read: leveraged over 80:1) long Portuguese, Italian, Irish, and Spanish debt. You could argue they PIIS-ed their money away.
Except, here’s the thing, it wasn’t all their own money they were PIIS-ing away. You know how most firms have a thing where they don’t use customer money for in-house trading? I think that thing is called a “law” or something. Anyway, MF Global supposedly did not have that thing, and may have somehow managed to misplace a solid $600 million in customer money. So they’ve got that going for them. Also, the SEC is investigating some of MF Global’s traders for insider trading on the firm’s bonds just prior to its downgrade to junk status, but we feel like that’s just dogpiling at this point.
Apparently the whole “might have lost hundreds of millions of customer monies in a stupid gamble that was also illegal” business scared away everyone who might have bought MF Global, so it’s good to see there is still some sense left on Wall Street.
Also, it’s worth noting that Corzine was on everyone’s shortlist for Treasury Secretary as recently as August, so if that doesn’t make you want to hug Timmay, nothing will.