Shipkevich Bitcoin and ICO Attorney
Felix Shipkevich February 27, 2012

In its final days, MF Global moved scores of wire transfers in and out of the brokerage firm, including a suspicious transfer that may have amounted to $325 in customer funds, authorities say.

Authorities discovered the transfer on October 31, the day MF Global filed for bankruptcy. At first, the firm attributed its $1 billion shortfall to an “accounting error.” Executives later acknowledged that the shortfall was real, and the $325 million transfer may have significantly contributed to it.

It remains unclear where the money went, and whether it did, in fact, belong to customers. This transfer is one of many that the CFTC and FBI have spent months attempting to piece together in order to understand the days leading up to MF Global’s collapse. Another transfer, of $220 million on October 31, represented an attempt to patch the hole discovered in the commodities accounts. Once MF Global disclosed the shortfall to the CFTC and the CME Group, the exchange that regulated the firm, MF Global shifted the money from securities to the commodities unit, where the shortfall in client cash was discovered. Hours later, the firm filed for Chapter 11 bankruptcy.

Lawyers and regulators have struggled to reclaim $1.6 billion in funds, and to-date clients have received about two-thirds of their money. The transfer from securities to commodities intensified the investigation, pitting the SEC and CFTC against one another. The CFTC has said that commodities customers are entitled to the funds they received, while the SEC argues that the money belongs to securities customers.If the SEC wins the dispute, commodities customers will have even more to recover.

Authorities examining MF Global are narrowing in on employees involved in the treasury and finance function of MF Global’s Chicago operations, in an attempt to learn what happened to commodity customers’ funds. So far, authorities traced hundreds of millions in customer money to JPMorgan Chase and other trading partners and securities customers, mingling customers’ money with the firm’s funds.

Read more about developments in the MF Global investigation.

Photo credit: Images Money