Prof. Edward Pekarek, assistant director and supervising attorney at Pace Law School’s Investor Rights Clinic, is available to speak to the media about the collapse of MF Global and the FBI’s investigation into possible missing client funds.
While comparisons of MF Global and Lehman Brothers abound, according to Visiting Prof. Pekarek, the far more intriguing examination more likely comes from within. Man Financial was the brokerage division of U.K. hedge fund manager Man Group plc that was “spun off” as Man Global in an IPO during the heady derivatives days of 2007. Renamed MF Global, the firm’s lineage traces back to the IPO one of the most notorious brokerages, Refco.
Merely two months after its shares first traded publicly in the fall of 2005, Refco was the single largest brokerage firm to ever file bankruptcy. Current news accounts indicate that MF Global management acted with similar desperation as its predecessor, once their hubris had also run amok. Professor Pekarek is presently in the midst of authoring an article titled, From Refco to Repo 105: Ponzinomic IPO, which chronicles and examines the largest brokerage bankruptcy, as well as its shadowy ties to a European “rogue trader” banking scandal. Prof. Pekarek has also authored two related articles, The Due Diligence Defense and the Refco IP and The BAWAG Banking Scandal: How Over a Billion in Concealed Currency Trading Losses Caught Up with an Austrian Bank Almost a Decade Later.
Refco’s top executives and an outside lawyer were prosecuted criminally and are currently incarcerated in federal prison. It appears possible that a similar fate may befall MF Global managers, especially if the hundreds of millions of customer dollars that are reportedly missing were in fact used improperly, such as to postpone the firm’s inevitable collapse.
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Prof. Edward Pekarek
Pace Law School’s Investor Rights Clinic Assistant Director and Supervising Attorney
Pace Law School Visiting Professor