Brokerage MF Global bankrupt after euro debt losses

NEW YORK : Struggling US brokerage firm MF Global filed for bankruptcy Monday, after confidence in the firm was shatter

Published October 31, 2011 Updated October 31, 2011 12:05pm

2 min

By Imad Uddin

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Shares in the brokerage -- which at one time held approximately $41 billion in assets -- were halted on the New York Stock Exchange early Monday in anticipation of the move.

While MF Global is well-known on Wall Street, it is not thought to be so interconnected that its collapse could trigger a crash like that seen in the wake of the Lehman Brothers bankruptcy in 2008.

But attention immediately turned to JPMorgan Chase and subsidiaries of Deutsche Bank, after MF's bankruptcy filing showed those firms to be the firm's two biggest creditors.

JPMorgan was said to have a claim of over $1.2 billion with MF linked to bond holdings, while Deutche Bank had a claim of over $1.0 billion.

Shares in JPMorgan fell 3.6 percent on the news while Deutche Bank's US-listed shares fell 8.1 percent.

Ahead of the bankruptcy filing, Chris Low of FTN Financial wrote that MF's downfall would be "the biggest US casualty so far in the European sovereign crisis."

"Hopefully, the firm's situation is unique. (Chief executive Jon) Corzine's bet on sovereign debt is what got the firm in trouble. According to regulators, other, bigger US entities are not exposed."

The Financial Times and The Wall Street Journal earlier reported MF was to issue the filing as part of a plan to sell off assets to Interactive Brokers Group, although it was still not certain that deal would go through.

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