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February 7th, 2012
Commodities rose to the highest level in more than five months as the dollar declined after Federal Reserve Chairman Ben S. Bernanke said that the U.S. jobs market is far from healthy.
The Standard & Poor’s GSCI Index of 24 commodities gained 0.8 percent to 673.99 at 1:20 p.m. in New York, the highest level since Aug. 31.
Oil futures advanced as much as 2.3 percent after Bernanke’s comments sent the dollar to its lowest level against the euro since Dec. 12, making assets priced in the U.S. currency more attractive. Bernanke said in testimony prepared for the Senate Budget Committee that the U.S. has a long way to go before the jobs market operates “normally.” Gold, aluminum and copper also advanced.
“There’s general improvement in risk sentiment and strong weakness in the dollar,” said Nic Johnson, who helps manage about $30 billion in commodities at Pacific Investment Management Co. in Newport Beach, California. “Equities are higher, commodities are higher, so people are generally putting on risk.”
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February 3rd, 2012
Commodity Brokers – Orange-juice futures fell, heading for the biggest weekly drop since mid-August, as tests by the U.S. Food and Drug Administration for a banned fungicide in some domestic supplies indicated no health risk. Cotton rose.
The FDA said yesterday that nine of 14 samples contained carbendazim in concentrations of less than 80 parts per billion, a safety benchmark set by the government. The agency, which will conduct follow-up tests, said it “does not believe there is a need to continue” screening juice already in the U.S. A probe on imports still is under way. Futures headed for the first weekly decline since mid-December.
“A good chunk of the rally was because of this probe,” Jack Scoville, a vice president for Price Futures Group in Chicago, said in a telephone interview.
Orange-juice futures for March delivery declined 1.5 percent to $2.01 a pound at 9:58 a.m. on ICE Futures U.S. in New York. The price has dropped 4.7 percent this week. On Jan. 23, the commodity rose to a record $2.2695.
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January 26th, 2012
Commodity Brokers – MF Global (MFGLQ) Holding Ltd.’s clients may be the losers no matter who wins a $700 million dispute between bankruptcy administrators in London and New York that threatens the return of money locked in customer accounts.
The trustee of MF Global Inc., the New York brokerage unit, is seeking the return of money used as margin for American customers trading in Europe. It wants U.K. administrators KPMG LLP to tap into $1.2 billion it had set aside for customers with segregated accounts, which are supposed to be protected.
MF Global Inc. trustee James Giddens “is prepared to use all legal avenues available to him in recovering the customer funds, including litigation,” Kent Jarrell, a spokesman for Giddens, said in an e-mailed statement.
If successful, the trustee’s claim would significantly reduce KPMG’s client money pool and lower returns for U.K. customers, said two people with knowledge of the discussions who declined to be identified because they are confidential. Should KPMG win, U.S. customers will be treated as unsecured creditors and face a lengthy wait for any payout.
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January 12th, 2012
Commodity Brokers – One of the hottest debates raging from Wall Street to the farm belt is destined to stretch into next month, as the trustee overseeing the bankruptcy of broker MF Global Inc collects the final claims by customers who are missing some $1.2 billion – or, maybe, only half as much.
Once a Jan 31 deadline for customer claims comes and goes, trustee James Giddens plans to “sharpen” his longstanding estimate of a $1.2 billion “hole” in customer money. It’s an estimate that has been challenged, publicly or privately, by other agencies involved in the investigation who say the gap may be only half as large.
Some say the discrepancy is technical: Giddens’ estimate includes foreign funds, while others only include U.S. collateral, for instance. Other bankruptcy lawyers and advisors say it may be a case of Giddens, who is responsible for liquidating the brokerage and returning money to customers, managing expectations, hoping to keep anxious traders at bay until he can recover more funds.
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December 24th, 2011
President Barack Obama’s re-election campaign returned campaign contributions from Jon S. Corzine, former chairman and chief executive officer of MF Global Holdings Ltd., according to a Democratic official.
Obama for America and the Democratic National Committee refunded the money from the former New Jersey governor out of an abundance of caution, said the official, who requested anonymity. Republicans have criticized the president for keeping contributions from the head of a firm that collapsed and filed for bankruptcy.
Corzine, 64, and his wife, Sharon Elghanayan, each contributed $30,800 to the Democratic National Committee and $5,000 to Obama’s campaign, the maximum amounts that individuals are allowed to give, said the official. Corzine, who testified before a congressional panel about MF Global’s bankruptcy and $1.2 billion in missing customer funds, has been one of Obama’s top fundraisers this election cycle. In April, Corzine hosted a fundraiser for Obama at his Manhattan home.
Corzine was one of 41 donors who bundled more than $500,000 this year for Obama’s re-election effort, according to documents released by the campaign Oct. 14. So-called bundlers arrange for contributions from other people and funnel the money to campaigns.
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December 9th, 2011
Throughout more than two hours of congressional testimony, Jon S. Corzine was careful to invoke the idea of intent when asked how his failed brokerage, MF Global Holdings Ltd., came to lose track of as much as $1.2 billion in its clients’ money.
“I certainly would never intend to direct or have segregated funds moved,” Corzine said yesterday during his appearance before the House Agriculture Committee, testifying he didn’t know what happened to the missing money. “I am comfortable that certainly on my part there was no intention to violate segregation rules,” he told lawmakers at another point.
Corzine, responding to the first of three subpoenas from congressional committees investigating the collapse of his firm and the missing funds, defied the expectations of some analysts when he decided to answer questions and not resort to his right against self-incrimination. Lawyers said it was no surprise that he repeatedly focused on intent in his testimony.
The language Corzine used “is certainly an attempt to defuse any criminal responsibility,” said Stephen Braga, an attorney with Ropes & Gray LLP in Washington.
“Most crimes require a wrongful intent, and accordingly mistake is a defense to most crimes,” Braga said. “This testimony suggests an unintentional, mistaken occurrence, which would not be criminal. Whether that suggestion fits the facts or not remains to be seen.”
The 64-year-old former New Jersey governor and U.S senator, who hasn’t been accused of wrongdoing, spoke publicly for the first time since he resigned as chairman and chief executive officer of MF Global, which filed the eighth-largest U.S. bankruptcy Oct. 31.
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December 8th, 2011
James Giddens, the trustee overseeing the MF Global Inc. brokerage liquidation, defended a planned transfer of $2.1 billion to U.S. commodity customers after receiving 18 formal objections and 43 letters querying the move.
In the transfer, Giddens would pay out from 80 percent to 85 percent of all assets remaining in his control, keeping $800 million in reserve, according to his court filing yesterday. Two previous payouts to commodity customers totaled about $2 billion.
To deal with many of the objections, which “raise common concerns,” Giddens said he “made some language changes” in a proposed order he will ask the judge to sign approving the transfer. To satisfy administrators of MF Global’s U.K. and other foreign affiliates who objected that the transfer might deplete funds available to pay them, he would make future transfers based on available assets and not ask the judge to let him simply use his own discretion, he said in the filing.
“The trustee believes it would be more prudent, relieve uncertainty, and better inform the expectations of customers to make further bulk transfers, if any, only upon further motion and order of the court based on facts and circumstances and availability of property,” he said.
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December 2nd, 2011
Commodity Brokers – The U.S. House Agriculture Committee voted to subpoena Jon S. Corzine, former chairman and chief executive officer of MF Global Holdings Ltd., for a Dec. 8 hearing on the collapse of the New York-based brokerage.
House lawmakers on the panel voted by voice without opposition today in Washington to issue the subpoena. The Senate Agriculture Committee and the House Financial Services Oversight and Investigations subcommittee separately announced plans to consider Corzine subpoenas next week.
Congress has joined federal regulators in seeking answers about the steps that led to MF Global seeking bankruptcy protection on Oct. 31 after wrong-way bets on European sovereign debt. The Commodity Futures Trading Commission, Securities and Exchange Commission and Justice Department are investigating as much as $1.2 billion in missing customer funds.
“The events that have unfolded since Oct. 31 are unprecedented and have resulted in the loss of property of many of our constituents and a loss of confidence in the futures markets for many more,” Representative Frank D. Lucas, the Oklahoma Republican who leads the House Agriculture Committee, said at the meeting. Corzine’s testimony “is essential to fulfill our objectives on behalf of our constituents and to complete the hearing record,” Lucas said.
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December 1st, 2011
Commodity Brokers – Dennis Magnuson is a farmer, not a gambler. He trades in the commodity futures markets hoping to stabilize the cost of feed for the pigs he sells. The Austin, Minn., resident said he would never put his money into bonds issued by European countries flirting with economic collapse.
But the now-collapsed MF Global Holdings Ltd. may have done that for him.
Magnuson is among more than 100 Minnesota farmers estimated to have assets frozen as a result of MF Global’s bankruptcy filing and an estimated $1.2 billion in missing customer funds. Most of the farmers didn’t choose to do business with the huge brokerage house that has become one of the biggest financial failures in U.S. history. They invested through brokers or financial advisers who eventually used MF Global to clear trades.
On Thursday, members of the Senate agriculture committee, including Minnesota Democrat Amy Klobuchar, grilled the heads of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) over apparent loopholes in rules that allowed farmers’ commodity trades to end up in risky European bonds.
“[Regulators] are still investigating if what [MF Global] did was illegal,” Klobuchar said in an interview after the hearing. “And it may well have been illegal. We don’t know that yet. But what we know is that the law is inadequate when it comes to disclosing transactions like they made … it is possible that they were able under existing law to hide those risky transactions.”
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December 1st, 2011
An accounting technique used by MF Global Inc., the failed broker-dealer, is being reviewed by the U.S. Securities and Exchange Commission, agency Chairman Mary Schapiro said.
The SEC is in talks with the Financial Accounting Standards Board, which sets accounting standards, about “repurchase-to- maturity” agreements that MF Global used in off-balance-sheet accounting, Schapiro said today during a hearing before the U.S. Senate Agriculture Committee in Washington.
“We are talking with FASB about whether we need more disclosure of those,” Schapiro said. They are the only type of repurchase agreements that can be used off balance sheet, she said, speaking alongside Commodity Futures Trading Commission Chairman Gary Gensler.
Both the SEC and FASB also are looking into whether the methods MF Global used to account for its investments in European debt were legal.
“How is it possible that someone is able to bet the farm here, multiple times, and it disappears from the balance sheet because of this repo-to-maturity technique?” asked Senator Kent Conrad, a North Dakota Democrat, noting that the technique made it appear as though the risk had been “sold.”
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