In an overnight session in January 2008, Dooley allegedly executed a series of large buy and sell orders for about 1,500 wheat futures contracts, according to the indictment. Each contract comprises 5,000 bushels.
While lacking the funds to cover potential losses, he liquidated his position that night for a gross profit of about $37,000, prosecutors said. Confronted by an MF Global supervisor the next day, Dooley allegedly said the activity was inadvertent, according to the indictment.
A month later, with a negative $3,000 balance in his account, Dooley allegedly executed buy and sell orders for almost 32,000 contracts, including more than 24,000 for May 2008 wheat futures and, in the course of trading that night, exceeded positional limits set by the Commodity Futures Trading Commission. He was unable to successfully liquidate his position.
“On or about Feb. 27, 2008, MF Global authorities learned of defendant’s overnight trading, deactivated defendant’s account and then liquidated the remainder of defendant’s position,” according to the indictment. “A loss of $141,021,489 was realized. Defendant was financially unable to cover the losses created by his trading.”
The lost money was equivalent to 6 percent of MF Global’s equity at the time, Chief Executive Officer Kevin R. Davis said in a Feb. 28, 2008, teleconference.
The case is U.S. v. Dooley, 1:10-cr-00335, U.S. District Court, Northern District of Illinois (Chicago).