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| Broker MF Global misused customer cash, says regulator | |
| (about 1 hour later) | |
| Troubled broker MF Global did not separate its customers' money from its own funds, according to its regulator. | Troubled broker MF Global did not separate its customers' money from its own funds, according to its regulator. |
| By law, brokers have to keep their customers' money separate from other customers' money and from the company's own funds. | By law, brokers have to keep their customers' money separate from other customers' money and from the company's own funds. |
| The statement came from the Commodity Futures Trading Commission and CME Group, which runs the Chicago Mercantile Exchange. | The statement came from the Commodity Futures Trading Commission and CME Group, which runs the Chicago Mercantile Exchange. |
| MF Global filed for Chapter 11 bankruptcy protection on Monday. | MF Global filed for Chapter 11 bankruptcy protection on Monday. |
| Chapter 11 postpones a US company's obligations to its creditors, giving it time to reorganise its debts or sell parts of the business. | Chapter 11 postpones a US company's obligations to its creditors, giving it time to reorganise its debts or sell parts of the business. |
| "CME has determined MF Global is not in compliance with Commodity Futures Trading Commission [CFTC] and CME customer segregation requirements," CME chief executive Craig Donohue said. | |
| "While we are unable to determine the precise scope of the firm's violation at this time, we are investigating the circumstances of the firm's failure." | |
| The brokerage has 2,000 staff worldwide, including 600 in London. | The brokerage has 2,000 staff worldwide, including 600 in London. |
| It sought bankruptcy protection after revealing that it had a £4bn exposure to eurozone sovereign debt. | It sought bankruptcy protection after revealing that it had a £4bn exposure to eurozone sovereign debt. |
| The CFTC told MF Global in September that it was over-valuing some of its European bonds and told the company to put up more cash. | |
| After that, credit rating agencies downgraded MF Global's bonds to junk status, and trading partners made it put up more cash to guarantee its transactions. |