A regulatory filing revealed that a grand jury from Chicago is investigating how $1.6 billion cannot be found after MF Global fell into bankruptcy in the fall of 2011. The CME Group Inc., a financial exchange operator, said that it had been issued a subpoena by the Chicago grand jury for its documents and its witnesses attached to MF Global. The company used to be run by the former Governor Jon Corzine of New Jersey.
The investigation by the grand jury had not been previously known to the public. The disclosure of the investigation helps to move the process closer towards criminal prosecution of the MF Global executives who have been accused of taking customer money and using it improperly. The missing $1.6 billion was money belonging to the clients of MF Global. The money supposedly was used to aid the company’s financial needs as confidence in the firm by clients and investors dipped.
In the event that a firm collapses, money from customers is supposed to be kept separate from money used by the corporation. The inappropriate use of the customer money by MF Global, if found true, could be a violation of investor protection for clients who work in options and futures. A criminal lawyer has been retained by Corzine since the fall, who told Congress that he had no idea as to where the money is or how it disappeared.
The court filing said that the Commodity Futures Trading Commission has also subpoenaed the CME Group, which has responded to that subpoena. The head investigator on the case is the Commodity Futures Trading Commission, which can file civil charges against MF Global. The Chicago Mercantile Exchange and the New York Mercantile Exchange are owned by the CME Group; two entities that trade futures. The books for MF Global were to be audited by CME Group.
The collapse of MF Global reportedly cost the CME Group $29.1 million back in 2011. CME Group also claims that its volume of trades decreased in the fourth quarter of 2011 because of the collapse for MF Global. Multiple civil lawsuits filed in courts across the country claim that the CME Group was somewhat responsible for the money lost by MF Global. The court filing says CME Group has “strong legal and factual defenses to the claims.”
No statements or comments were made by the spokesperson for the federal court in Chicago because the investigation is a grand jury investigation.