Corporation Fraud Essay Example | Topics and Well Written Essays - 750 words

Corporation Fraud - Essay ExampleMF ball-shaped and its parent holding participation (MFGH) were forced by federal regulators to file for Chapter 11 bankruptcy protections on October 31, 2011 (Bunge 3). Within the span of less(prenominal) than a week one of Wall Streets pinnacle trading firms was reduced to big money of broken promises and over one billion dollars in missing investor and client assets. After the MF spherical bankruptcy was filed, investigators from the Securities and Exchange Commission discovered that a subsidiary of MF worldwide, MFGI, had improperly booked commodity trading transactions that exceeded the margin capability of MF Global to repay (Arends 14). The nature of this and how it was orchestrated and surreptitious by MFGI and MF Global executives is the focus of this paper. MF Global was in the business of facilitating futures trading (USCHC on Financial Services 81). If a client opened a position on a commodity, MF Global was required to post the mar gin required to hold that position on the contract exchange. For the approximately part, the amount of margin required was determined using a standardized algorithm called the Standard Portfolio outline of Risk (SPAN) (USCHC on Financial Services 102). ... In reality, the under currents that ripped the foundation from under MF Global were caused by a loop hole in accounting practices that allowed MF Global executives to book assets on both nerves of the commodity and securities ledger (Orol 2). MF Global executives at some point in 2010 began co-mingling assets from the securities side into the commodity operation to cover massive short position losses on European bonds (Arends 9). The chief Executive Officer at MF Global during the crisis was a former Governor and Senator from the state of newly Jersey, John S. Corzine. John Corzine was first appointed as Chief Executive Officer (CEO) in 2010 by the MF Global Board of Directors (Bunge 9). Corzine envisioned turning MF Global i nto a dominant coronation Bank on Wall Street and embarked on an aggressive(Weidner 2) and risky management plan (Sandler 2). slight than eighteen months later the contrived plans of Jon Corzine to alter and reshape the much respected MF Global began to unravel. through the SIPA process and the unwinding of MF Global commodity positions, it has been revealed that the shortfall in customer assets had two basic causes. MF Global by using a loophole in their audited and regulated (Orol 4). Accounting regimen had been depositing and moving customer segregated capital and securities through MF Global general accounts that were operated by company commodity traders and executives. The funds which were being transferred between off-shore and domestic banks in the United States were in the process deposited through MF Global corporate accounts (Orol 3). Customer money was re-routed by MF Global to artificially combust the companies deposit