Good News, Bad News

In March 2012, I wrote that it looked as though the many investors -- some of them very small investors -- who lost everything in the collapse of MF Global just might get their money back.

It's taken a while, but indeed it now looks as though it's happening.

Today's New York Times carries a DealBook column by Ben Protess (who covered much of the disaster that was MF Global) reporting that MF Global customers are "now all but assured" of receiving "every last penny" of the $1.6 billion that, shall we say, vanished from customer accounts.

Many of the firm's original customers sold their claims to banks and investment firms, unsure that they would ever see the funds owed to them. US customers have already received nearly everything that they lost, but overseas customers are the ones who will really benefit, having to date recovered only about three-quarters of their money.

The MF Global story never got as much coverage as I thought it deserved. As I wrote exactly two years ago this month, MF Global was a brokerage firm whose chairman and chief executive officer, Jon S. Corzine, was a former Goldman Sachs partner, former New Jersey governor, and former US Senator from New Jersey. The firm made a number of bad bets, and, while desperately trying to find a buyer, made the unbelievably bad (not to mention illegal) decision to raid customers' accounts to try to stay afloat. In the blink of an eye, $1.6 billion in customer money disappeared. Corzine's resume got the company's downfall some press, and while there was a lot of commentary about the absolute no-no of using customers' money to try to prop up the company, few people seemed to care about the fact that -- while the business was imploding -- Corzine was trying to walk away with a $12.1 million severance package. Moreover, as many as 23 senior MF Global may have received six-figure bonuses for "helping" with the bankruptcy investigation.

There's no question that the return of customer money, taken illegally, is good news. The bad news, as far as I'm concerned, is that Corzine and his cronies got away with it.

Yes, Corzine is still facing private lawsuits and civil charges (filed in June by the Commodity Futures Trading Commission, click here for a Protess DealBook New York Times story from June of this year). But really? He got away with it. Completely.