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MF Global Action Creates Stir

MF Global Action Creates Stir
From political 'rebates' to an accounting debate over a pile of money, the wrangling over this bankruptcy drags on.

Note: This is a roundup of news items that have appeared over the holiday weekend covering the ongoing MF Global debacle.

When the going gets tough the political donor beneficiaries apparently provide rebates. Over the weekend, Fox News reported that President Obama's re-election campaign and the Democratic National Committee have returned more than $70,000 in contributions from Jon Corzine, former head of MF Global. Corzine is a top Obama fundraiser, bringing in more than $500,000 for the re-election campaign since April, according to the report. The DNC says it will evaluate returns of donations from other MF Global employees on a case-by-case basis.

Perhaps the hottest issue is a debate between two accounting firms - Price Waterhouse in the United States and KPMG, administrator in Britain of the liquidation of MF Global's British arm. Apparently, the U.S. trustee presiding over the bankruptcy is requesting return of more than $600 million from the British arm of MF Global, however KPMG, court-appointed administrator in Britain disputes that conclusion. Meanwhile, everyone is still looking for $1.2 billion of missing client money.

That dispute over the $600-plus million could hurt further efforts that all U.S. customers would get at least 72% of their money back, according to a New York Post report. While the contested funds are not part of the missing $1.2 billion, they can still cut recoveries of U.S. customers who trade in foreign futures.

As for the $1.2 billion, wire reports note that the Commodity Futures Trading Commission is reporting it has identified transfers of customers' segregated accounts, but they continue to look at subsequent transfers of those funds as part of an ongoing investigation.

And in the Senate, Chuck Grassley, R-Iowa, is one of 16 senators who wrote the U.S. Attorney General urging him to bring justice to the actions of MF Global executive. In the letter, the senators say that "if the (Justice) Department's ongoing investigation uncovers illegal actions, criminal prosecution shoule b pursured without hesitation."

Senators are hopping mad that segregated accounts of clients were violated as they were in this case. MF Global was responsible for more than 40% of the trade activity at the Chicago Board, and its collapse has had far-reaching impacts on brokerage firms that cleared trades through the organization.

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