MF Global can't find $633 million of customer funds

Is it possible that over six hundred thirty-three million dollars of customer money is nowhere to be found? MF Global accountant résumés are easy to find on Linked in, though. MFG's auditor, an independent accounting firm hired to sign-off on the accuracy of the books as a protection for stock holders, is PricewaterhouseCoopers LLP. How did they miss $600 million? Was anyone doing their job there?

It's also an embarrassment for the CME, the world's largest futures exchange, who has the responsibility to audit customer funds at its member firms. After it's rebirth as a publicly traded "for profit" corporation in 2002, the CME became more interested in customer deposits to cover margin requirements rather than in total customer deposits. In fact, when over 50,000 MF Global customer accounts were transferred on Monday to other clearing firms (primarily R.J. O'brien and Rosenthal Collins Group), the positions were transferred but only the funds required for margining the positions were transferred from MF Global customer funds. In other words, traders who were under-margined were more likely to get all their money whereas traders with extra funds in their account received only that portion of their money that was required to margin the transferred positions.

The Chief Financial Officer at MF Global is 34 year old Henri Steenkamp who spent his previous eight years as an employee of MFG's "what-$600-million?" auditor, PricewaterhouseCoopers. But there are plenty of others with oversight that dropped the ball on behalf of customers, too. There's the Securities and Exchange Commission (SEC) who, along with the FBI, is "investigating" things at MF Global. Then there's the Commodity Futures Trading Commission (CFTC). And what about the Futures Industry Association (FIA) that gets a piece out of every customer trade that takes place. Is there anyone looking out for the customer now? According to the 1970 Securities Investor Protection Act, brokerage customers are to be at the front of the bankruptcy payback line. The current thinking is that some of the customer segregated funds are just "gone" and customers of MF Global will not get all their money back. Sounds like a potentially big payday for lawyers coming up, though.