MF Trustee: $1.6B Gap Between Claims, Assets

The MF Global Inc. (MFGLQ) brokerage has a shortfall of at least $1.6 billion to pay commodity customers’ claims, the trustee liquidating the firm said.

James Giddens, the trustee, gave the estimate today after counting allowable customer claims and the assets under his control. Giddens previously estimated the shortfall at about $1.2 billion and has now folded in $700 million that he is disputing with the administrators of MF Global’s U.K. affiliate. The gap, which applies to commodities customers who traded on U.S. and foreign exchanges, will change over time as claims are processed and assets recovered, he said.

“The estimated deficiency may rise or fall in significant amounts,” Giddens said in a statement.

The trustee has said customers of the bankrupt futures brokerage, formerly run by Jon Corzine, may not recover all their money. Giddens has traced most of the more than $327 billion in transactions completed during the brokerage’s last days. The banks, clearing houses and customers that received the funds may be subject to lawsuits seeking the money for customers missing funds from their accounts, Giddens has said.

Gap Figures

http://www.bloomberg.com/news/2012-02-10/mf-trustee-1-6b-gap-between-claims-assets.html

World’s Dumbest Traders Were at Credit Suisse: Jonathan Weil

The guilty pleas last week by two former Credit Suisse Group (CS)traders, on charges of falsifying their company’s asset values, revive an age-old question: How dumb do you have to be to get criminally convicted for a fraud you committed while working at a bank deemedtoo big to fail?

It’s a shame the television series “America’s Dumbest Criminals” went off the air more than a decade ago, because the cases of Salmaan Siddiqui, 36, and David Higgs, 42, would have provided wonderful fodder as an example of high finance gone feloniously brain-dead. Sure, their stories might not have the same mainstream appeal as, say, the video of a gun-wielding robber at a convenience store who wore a see-through plastic bag over his head as a disguise.

Still, their forays into illegality were so painfully dimwitted they deserve to be celebrated, if only to distract us from a more unnerving aspect of their story: In all probability, lots of other bankers committed the exact same kinds of acts during the financial crisis. And the vast majority of those who did will never be prosecuted, mainly because they weren’t so dense about the way they did it.

Imagine this: You are a Wall Street trader during the summer of 2007, specializing in complex mortgage bonds that no human being is capable of fully understanding. What little you do grasp about these bonds is that if their values go down too much, your year-end bonus won’t be as high as you want it to be.

Now You See

http://www.bloomberg.com/news/2012-02-10/world-s-dumbest-traders-were-at-credit-suisse-commentary-by-jonathan-weil.html

Canadian Dollar Slides Most in a Month Amid Turmoil on Bailout for Greece

Canada’s dollar weakened the most in a month against its U.S. counterpart after European officials demanded Greece enact greater austerity measures before winning more funding, damping demand for riskier assets.

The currency dropped below parity with the U.S. dollar even after Statistics Canada data showed the nation recorded a trade surplus of C$2.7 billion ($2.7 billion) in December, the widest since October 2008. The currency had its first weekly loss since Jan. 6 as stocks and crude oil, Canada’s biggest export, fell.

“The overriding situation in the euro zone is weighing on sentiment,” said Omer Esiner, chief market analyst in Washington at Commonwealth Foreign Exchange Inc., a currency brokerage. “The markets have been overly optimistic.”

The currency, nicknamed the loonie for the image of the aquatic bird on the C$1 coin, depreciated 0.7 percent to C$1.0014 per U.S. dollar at 5 p.m. Toronto time. It weakened as much as 0.9 percent, the biggest intraday drop since Jan. 5, and declined 0.8 percent for the week. The loonie touched 99.26 cents yesterday, the strongest level since Oct. 31. One Canadian dollar buys 99.86 U.S. cents.

Implied volatility for one-month options on the Canadian dollar versus the greenback touched a 10-month low before paring its decline as the loonie weakened. It reached 7.66 percent, the lowest level since April 11, before rising to 8.08 percent. Implied volatility, which traders quote and use to set option prices, signals the expected pace of swings in the underlying currency. It has averaged 10 percent over the past year.

Bonds Gain

http://www.bloomberg.com/news/2012-02-10/canadian-dollar-drops-most-in-a-month-as-europe-witholds-greek-bailout.html