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Reuters blog archive
from MacroScope:
MF Global knows its former clients’ pain
Futures customers who smartly pulled their money out of failed MF Global Holdings Inc. in the weeks or months before the broker’s Oct. 31 collapse may not have escaped calamity after all.
As Reuters’ Jeanine Prezioso reports, some are worried the bankruptcy trustee could come after those funds to force them to share in any losses.
MF Global knows the feeling. It's been there, and done that.
After futures broker Sentinel Management Group Inc failed in 2007, the trustee in that case, Frederick Grede, sued 50 of its former customers to recoup $600 million in funds withdrawn prior to the bankruptcy.
Among them was MF Global, which had withdrawn $50 million from Sentinel shortly before Sentinel froze all accounts in a desperate effort to avert catastrophe.
MF Global, like Sentinel’s other customers, had deposited its own customers’ funds with Sentinel, which promised to deliver higher returns on those funds than MF Global could have generated on its own.
Instead, the broker collapsed, and four years later Sentinel’s trustee is still trying to get former customers, including MF Global, to share in Sentinel’s massive losses –nearly all of which, Grede says, stemmed from the broker’s failure to keep customer funds separate from its own.
from Tales from the Trail:
FBI latest computer overhaul has more glitches
The FBI's trouble-plagued, long-running effort to put in place a new computer system has hit a few more glitches.
An audit report Tuesday by the Justice Department's inspector general said the latest phase of the project for a fully electronic case management system will take three months longer than last expected and will cost $155 million -- $18 million more than what had been budgeted.
It identified several new areas of concern with the overall progress of the so-called Sentinel project and with implementation of the project's second phase.
There have been problems with the FBI's computer systems dating back more than a decade and the Sept. 11, 2001 attacks led FBI Director Robert Mueller to try to accelerate efforts for a massive upgrade.
In 2006, the FBI awarded a contract to Lockheed Martin to develop the system in four phases. The FBI came up with the project after problems caused it to scrap an earlier system.
The FBI's estimate of Sentinel's overall cost has not increased from about $450 million since the last inspector general audit nearly a year ago.
But the overall project completion date has been pushed back to September of 2010, three months later than what the FBI previously estimated and nine months later than what was originally planned, according to the audit.
