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MF Global client money may not be “missing” – firm likely took advantage of legal loophole to use customer money to buy assets in company’s name

MF Global client money may not be “missing” – firm likely took advantage of legal loophole to use customer money to buy assets in company’s name. It’s a legal loophole in international brokerage regulations concerning rehypothecation, where a bank or other broker-dealer reuses the collateral pledged by its clients as collateral for its own borrowing. The bottom line is that MF Global’s clients may not get their MF money back. Same old story, Democrats and Other People’s Money…

This post was last modified on December 8, 2011

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Bonfire of the Absurdities: After 35 year career writing software for IBM mainframes, am now self-employed contractor thinking of joining a union and striking for higher wages. Cured morbid fear of heights when I learned to look at them as lengths standing on end. Uncompromising in refusal to accept browser cookies. Amateur investor who has accumulated a small fortune in the market after starting out years ago with a large one. For recreation, I run, hike, kayak and play tennis but will not consider synchronized swimming under any circumstances.

View Comments (2)

Joe Redfield says:

December 8, 2011 at 7:11 pm

Fascinating article, particularly the part at the end where they point out that this whole re-hypothecation pyramid, resting on a firm foundation of European government debt, could come crashing down around our ears at any minute.
jukin says:

December 8, 2011 at 3:27 pm

Good thing this wasn't a future republican SecTreas that stole billions of dollars or it would be all over the media.

Makes one contemplate how much Johnny C embezzled out of the New Jersey treasury. My bet it would make MF look like chump change.