According to CFO.com a new report by one of the company’s
bankruptcy trustees sheds light on the mystery of an accounting “error” that
bedeviled executives for three days prior to the firm’s bankruptcy – an error
that may have kept some MF Global executives from realizing that customer funds
were being raided to stave off illiquidity.
…..Now you might be saying that except for the size of the $540
million adjustment, “So what?” Well, this was no ordinary account. It was the
“customer-segregated” account that securities regulators tracked on a daily
basis, and it was the account that held customer funds along with a buffer – an
amount of money over and above customer funds that had to be maintained at all
times. And the size of the adjustment? It made the difference between a deficit
and a surplus, and the firm’s being in compliance or not.
This collective delusion lasted from a Friday morning through
a Sunday night with apparently no one in treasury or the company’s financial
regulatory group able to prove that no adjustment should have been made. To be sure, we may never know the whole
truth. The bankruptcy trustee admits that “witnesses’ descriptions regarding
this matter are confusing and contradictory.” I have no doubt. The fascinating
descriptions of MF Global’s final days read like a screenplay for a Keystone
Kops movie. “Everyone was running around uncertain what they were supposed to
do or how to do it,” as one congressman described the federal government’s
response to Hurricane Katrina....
Wait, wait…there’s more at http://www3.cfo.com/blogs/banking-cap-markets/banking--capital-markets/2012/06/MF-Global-Finds-Its-Phantom-Reporting-Error
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