Unstructured Finance

The taxman cometh for MF Global

January 5, 2012

By Matthew Goldstein

You can add the U.S. Internal Revenue Service to the long list of creditors and customers looking to get their money back from MF Global, the failed futures brokerage firm.

The IRS slapped a lien on what’s left of MF Global, seeking to recoup some $395,000 in unpaid taxes stemming from 2006 and 2007. The tax lien was filed with New York State’s division of corporations on Nov. 16, about three weeks after MF Global filed for bankruptcy.

The unpaid tax bill predates the period during which former New Jersey Governor Jon Corzine took over the helm of MF Global.

It was Corzine’s decision to make a big wager on European sovereign debt that ultimately sank the firm amid a series of margin calls from banks and lenders.

Earlier this year, we reported that in a last ditch bid to raise cash to meet those margin calls and return money to customers, MF Global sold hundred of millions of securities to Goldman Sachs on Oct. 27. But the proceeds from that transaction never made it into MF Global’s coffers and instead was claimed by its primary clearing firm, JPMorgan Chase.

Federal authorities believe that in a bid to save the firm from collapse, MF Global may have dipped into some of the $6 billion in customer money it kept in segregated accounts at Harris Bank in Chicago and other institutions.

Anywhere from $600 million to $1 billion in customer money is still unaccounted for and investigators have yet to say where the money went.

For his part, Corzine, who testified before two Congressional panels late last year, says he has no idea what happened to the customer money either.

 

 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •