FBI Reportedly Investigates MF Global, Jon Corzine's Future Uncertain

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Like Corzine's, the futures of the company's 2,900 employees are unclear, though the Financial Times reported employees in the office in London were told not to work but were not sent home.

Lurie said MF Global's bankruptcy has spooked the financial system, even diminishing the positive effect of the Greek debt deal last week.

"But now with this news from MF global falling apart in two weeks of being in the spotlight reminds us it's easy for financials to get caught up in market skepticism," Lurie said.

The bankruptcy demonstrates that while many financial institutions are in better positions now than they were in 2008, a liquidity scare can still cause a firm to deteriorate very quickly. It took only two weeks since the first discussion about MF Global's inadequate capital for the company to file for bankruptcy, she said, though there were earlier warnings.

In August, the Financial Industry Regulatory Authority (FINRA), an independent securities-firms regulator, instructed MF Global to boost its required net capital because of its exposure in Europe. And ahead of the company's second quarter results on Oct. 25, Moody's downgraded the company's debt to "Baa3" from "Baa2."

"Once Moody's downgraded the company and after the company posted a very poor quarter, the rest was a very quick process, somewhat akin to a run on the bank where perception of weakness becomes the reality," Patrick O'Shaughnessy, equity research analyst with Raymond James & Associates, said.

On Tuesday, Moody's downgraded the company further to "Caa1."

MF Global had disclosed its European sovereign debt position as early as its May 2011 10-K filing with the SEC, but it wasn't until Moody's downgraded MF's debt rating in late October that investor and client concern really started to rise, said O'Shaughnessy.

O'Shaughnessy said what was most surprising was the inability of Corzine and MF Global to "be on the same page" with the ratings agencies in terms of what level of risk and leverage was appropriate.

"A downgrade to junk for a firm with MF's profile and funding structure is essentially a death knell, so one would have expected MF to do everything possible to retain its investment grade rating," he said.

The SIPC announced Monday it is initiating the liquidation of MF Global, headquartered in New York City, under the Securities Investor Protection Act of 1970, as opposed to the federal bankruptcy code.

The SIPC can arrange the transfer of MF Global's brokerage accounts to a different securities brokerage firm, according to the Administrative Office of the U.S. Courts. If the SIPC is unable to arrange the transfer, the failed firm can be liquidated and the SIPC could send investors certificates for the stock that was lost or a check for the market value of the shares.

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