Ponzi Proof: Trustee says MF Global sustained itself on customer funds

February 7th, 2012

(WashPost) – As MF Global careened toward bankruptcy in October, the brokerage firm used customer funds to bankroll its business, apparently assuming that the money would be put back by the end of each day, a trustee overseeing the firm’s liquidation reported Monday.

But by the end of the day on Oct. 26, five days before MF Global sought bankruptcy protection, the firm came up short, the trustee reported. That was days before regulators were alerted to the shortfall, according to earlier accounts.

Now, an estimated $1.2 billion of customer money is missing.

It remains to be seen whether the money can be recovered, trustee James W. Giddens said in an update on his investigation of MF Global’s collapse.

Read full report here

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