Last weekend was just another weekend in the Raynovich family -- we shepherded the kids to their recreation activities, I negotiated with the spouse over household duties, we grabbed a few turns on the ski mountain. Then I got to spend hours filling out a mind-boggling claims packet in an attempt to retrieve some of the money that was stolen from my MF Global account.
For those of you who haven't followed: I found myself part of the MF Global debacle, when, after the large multinational securities and futures brokerage failed last October, I was one of the first to point out that it had drained cash out of customer accounts. And now, though authorities have dredged up and returned approximately 70% of the client money, we are now required to file a claim to throw some sort of legal Hail Mary in an attempt to retrieve the remaining 30%.
The claim deadline is today. Last night I finally finished filing the 14+ pages of documents electronically. So how did the claim "process" go? Bureaucratic bliss! Read forms over and over. Go through months of statements to reconcile balances and trades. Make PDFs of the statements. File electronically.
It wasn't, though, quite as bad as I'd feared. Other than one password issue -- which required a call to a customer service number that was, remarkably, returned two hours later -- it went smoothly. In total, it consumed about three to four hours of my Sunday. But toward the end, I have to admit it required a modest dose of stimulating beverage to take some of the edge off. But now, it's done. Click on the photo below to see my photo essay on filing out MF Global claims forms:
In the Beginning...
Nothing like forms to read.
Keep in mind: Nobody really knows what these claim forms mean, if and when we'll get any more money back, or why the former CEO of MF Global, Jon Corzine, is still wandering around in his street clothes. In fact, most people don't believe clients will see all their money returned. The paperwork will be dumped into a huge legal morass in the courts, pitting customers against creditors for money that can't even be located.
I was lucky, as filing the forms for my account was fairly straightforward. I had only one open trade at the time of the MF Global failure, it was a relatively small account with only a small portion of my net worth, and 70% of my cash has been returned. Yes, I want the rest of my money back, but it won't destroy me. I'm sure there are others that are not so lucky -- for example, commodity trading advisors (CTAs), who trade for clients for a living and had millions of dollars in client funds in their accounts when the failure came. Many of them, I'm sure, spent weeks wading through mounds of paperwork to deconstruct what happened to hundreds of trades and millions of dollars after MF Global failed.
One such CTA is Andrew Abraham, who has written much about the debacle. He wrote to his senator, Bill Nelson (D-FL), who sent back this lukewarm response.
The process for getting the client money back has been anything but cut and dried, especially for those who had large positions at the time. In the weeks following the failure of MF Global, there was little communication or accounting of what happened with the missing funds. Many of the client accounts were transferred to other brokerage firms, which said it was not up to them to unravel the messy details. Statements went missing for months, and accounting was delivered in later months.
Imagine not getting your bank account statement for a month or so -- and then having the bank tell you it's not sure how much money you have or where the missing funds went. That's basically what happened. Later, in December, some of the funds were mysteriously located and returned to the transferred accounts in the form of "bulk transfers."
Of course, there's one small detail -- nobody still has any idea where the more than $1 billion in missing customer funds went. The Wall Street Journal reported yesterday that the remaining cash may have been "vaporized," though I'm not sure if that is either a technical or a legal term.
The MF Global failure has pointed to a number of holes in market regulation. For example the Commodities Futures Trading Commission (CFTC), the regulatory body that oversaw MF Global's futures business, still maintains that what MF Global did was "against the rules." Yet, it appears that they were able to do it. And so far, nobody has been called on the carpet for the rule-breaking. There hasn't even been a minor wrist slap! Of course, the CFTC is scrambling to slap together some more rules after-the-fact.
Remarkably, there has been no criminal action against any of the MF Global executives, including Corzine, who merely shrugged his shoulders after the brokerage firm collapsed in October.