MF Global files for creditor protection
Firm is run by top Obama fund raiser, Jon Corzine
MF Global Holdings Ltd., a New York-based global investment bank which has become a casualty of Europe's debt crisis, says it is seeking bankruptcy protection.
The announcement Monday by the securities firm, which is run by Jon Corzine, a top fundraiser for U.S. President Barack Obama, came one week after it reported its biggest-ever quarterly loss.
Corzine is also a former New Jersey Governor and Goldman Sachs head.
MF Global’s shares plunged 66 per cent last week. Investors sold not only because of the $186.6 million US loss, but also after MF Global's debt was downgraded to junk status.
Credit-rating agencies expressed concern about the firm's $6 billion portfolio of European debt.
Last week the firm sought to reassure investors that the investment in European sovereign debt was prudent.
It blamed the big loss on weaker-than-expected trading revenue and one-time costs.
The Wall Street Journal and others reported that Corzine worked over the weekend to find a buyer. The Journal says that an effort to sell the firm to Interactive Brokers Group of Greenwich, Conn., fell through.
The filing came after the New York Federal Reserve said it suspended MF Global from doing new business as a primary dealer.
Primary dealers are companies considered financially secure enough to sell US government debt on behalf of the Federal Reserve.
Corzine has helped raised at least $500,000 for Obama's re-election campaign since April.
Of its five biggest unsecured creditors, four are vehicles set up by German megabank Deutsche Bank to buy bonds from MF Global. Its single biggest unsecured creditor is JPMorgan Chase Bank, NA, which bought more than $1.2 billion in bonds.
With files from The Associated Press