“Nothing good can come of this headline,” I said to my husband and a house guest on Sunday night, Oct. 16, 2011. I was perusing my iPad from the comfort of my living room couch to get caught up on weekend news when “MF Global Told to Boost Capital” was posted to the online version of The Wall Street Journal.
Unfortunately, I was right. Two weeks later, the company I worked for was bankrupt. Within a month, I was unemployed, with no severance, no unused vacation pay and a monthly health insurance bill bigger than my mortgage.
The speed with which events unfolded wasn’t surprising, though. I’d already been through one bankruptcy—Refco in October 2005—where it took just a single week to go from news headline to bankruptcy. This time around, I took comfort in believing that my “been there, done that” experience would repeat. I expected that MF Global’s FCM business would be acquired and moved seamlessly to another firm, with customer positions and segregated funds intact. We’d all still have jobs. Just a new owner and a new name on the door.
In the meantime, those of us on the former Lind-Waldock staff in Chicago who had been through Refco completely skipped the “deer in the headlights” phase and went into triage mode, knowing that we needed to: (1) Have good, complete, consistent answers to the hard questions that clients on the phone were asking of brokers and sales representatives; (2) Use all the online tools at our disposal—email, website and trading platform messaging—to communicate with clients about the latest developments; (3) Halt advertising while MF Global was the top story each news cycle; and (4) Keep the lines of communication open between senior management and employees.
Refco had gotten an “F” for each of those efforts six years earlier. And, although MF Global did do better, it didn’t earn much more than a C- or D+. Clients and employees largely got most of their information about what was happening to MF Global from CNBC, online news sources and the social media rumor mill.
To his credit, CEO Jon Corzine did hold a global, company-wide conference call on the morning of Tuesday, October 25. But, it probably did more harm than good. We expected the normally dynamic and open leader to explain in detail what had occurred over the previous week and the European debt trading position that had precipitated it all. We expected him to tell us how the firm was working to shore up its capital in the face of increased regulatory requirements and “buy the rumor, sell the fact” behavior by clients that had depleted client assets over the last six days. We expected to hear him say that he was so confident in MF Global’s future that he was personally buying millions of shares of stock at the currently depressed price near $2 per share.