Federal authorities are reviewing whether MF Global used customer money to pay the Deository Trust & Clearing Corporation (DTCC) as part of a margin call according to a New York Times story. Financial intermediaries routinely require extra collateral when firms run into trouble. The story states that a London clearinghouse forced MF Global to pay roughly $300 million to back some of its bond holdings during its last week.
The story notes that is unclear how much customer money was transferred to the DTCC, and whether officials at MF Global knew they were using client money. Haphazard recordkeeping and the flood of transactions in its final days might have concealed whether MF Global was deploying the customer cash for firm needs.
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