At the centre of the storm surrounding the collapse of MF Global is the flamboyant CEO of the company, Jon Corzine.
He was the head of Goldman Sachs, a former Democrat governor and senator of New Jersey, and is listed as one of the top fundraisers for President Barack Obama.
Now questions are mounting about his role in the events leading up to the collapse, forcing him to appear before congressional hearings, while the President's re-election campaign has announced that it would return more than $70,000 in contributions from him.
The first that most people knew of trouble at MF Global was a week before it filed for Chapter 11 bankruptcy, when it revealed a staggering $191.6 million quarterly loss from trades in European government bond futures.
The news led to nervous clients asking for their money back. Usually, they would have their funds wired to them. Instead, cheques were issued which subsequently bounced.
This has culminated in an investigation by regulators and the congressional hearings into the disappearance of an estimated $1.2 billion in customer funds. The firm is accused of having illegally transferred the money first into its US futures accounts to shore up bad bets, and then across to UK accounts. Here the lax leverage rules made it possible to raise much more funding to try to turn around the previous placings.
Corzine has told congress that he has no knowledge of the whereabouts of the missing money. He also claims he "never gave any instructions to misuse customer money". Other executives have taken the Fifth Amendment, protecting them from saying anything that might subsequently incriminate them in criminal proceedings.
Financial forecaster Gerald Celente, director of the Trends Research Institute, was one of the more high-profile victims of the MF Global bankruptcy. In the aftermath of the collapse he took to the airwaves to give vent to his fury.
"They took my money out of my account, six figures, and they have it. I cannot get any answer, and I can't get my money," he raged. "And you watch this guy, Corzine. They spell it wrong you know; it's spelled, J-U-S-T-U-S - just us. He's having dinners for Obama at $35,000 a pop. He's cleaned out and ruined a lot of people. So maybe the name MF, I'm thinking the first word is 'mother' and we can put the other word in there, if you use your imagination, because that's what they're doing to everybody."
Janet Tavakoli of Chicago-based Tavakoli Structured Finance is one of the fiercest and most respected critics of the current state of the US futures markets. She told the Sunday Herald: "I've heard people say that there's a loophole that means that what MF Global did was okay. They are mistaken. Pointing to the fine print hidden away in a contract is not acceptable. There is a law of malice in the US.
"And in any event, if the claims that what they did was okay were accepted, it would only have the effect of further eroding trust in the futures markets."
Tavakoli believes that the lack of regulation over investing in the futures markets even in the US – never mind the UK – have made them unsafe for speculation.
"The US financial press has no understanding of the futures markets and they are failing to provide coverage and context of the issues. The problem now is that, without the rule of law, no-one should trust the futures markets," she says.
"It is suspected that the regulator of these markets, the Commodities Futures Trading Commission, decided to give Corzine a grace period to sort out the mess and in so doing put customer funds at risk.
"The deficit may well have been existent long before MF Global crashed."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article