MF Global Holdings Files For Bankruptcy (MF)

MF Global Holdings Ltd. (NYSE: MF), the troubled broker-dealer, filed for bankruptcy protection today. MF Global, which is headed by former Goldman Sachs Co-Chairman Jon Corzine, filed for bankruptcy after running into problems due to its exposure to euro zone debt.

Earlier in the day, the Wall Street Journal had reported that the New York City-based company was considering filing for bankruptcy. Meanwhile, the New York Federal Reserve suspended any new business with MF Global.

Trading in MF Global shares has been halted today. The stock fell more than 60% last week.

The problems began for MF Global last week after the company’s credit rating was cut down to junk status by rating agencies. The rating agencies cited MF Global’s exposure to European debt as the reason for the downgrade.

MF Global also reported a huge loss for its second quarter last week. The company posted a loss of $186.6 million for the second quarter, primarily due to weaker than expected trading revenue and one-time costs.

Corzine, who became CEO of MF Global last year, planned to transform the company into a global investment bank. This led to MF Global making risky bets using its own capital, according to the Wall Street Journal. In the past 12 quarters, MF Global managed to post a profit only three times.

Meanwhile, the company’s exposure to European debt raised alarm bells among investors and analysts. The company was holding bonds of troubled euro zone economies.

According to several reports, MF Global was desperately looking for a buyer over the weekend. Meanwhile, the New York Fed suspended MF Global, which has a primary dealer status, until the company shows that it still meets the Fed’s standards for a primary dealer.

In its bankruptcy filing, MF Global listed its total debt at $39.7 billion and assets at $41 billion.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.