MF Global files for bankruptcy

MF Global Holdings Ltd, the futures broker run by former Goldman Sachs chief Jon Corzine, has filed for Chapter 11 bankruptcy after a tentative deal with a buyer fell apart.
The firm's meltdown in less than a week is a stunning setback for Corzine, who sought to turn MF Global into a mini-Goldman. Corzine became CEO last year after losing his governorship of New Jersey, and his big bets on euro-zone debt sealed the company's fate.
The bankruptcy filing came after talks to sell a variety of assets to Interactive Brokers Group Inc broke down earlier Monday, a person familiar with the matter said. Earlier, central banks and exchanges had slapped the broker with suspensions.
The bankruptcy makes MF Global the most prominent U.S. casualty yet from the euro-zone debt crisis, and harkens back to 2008 when Lehman Brothers collapsed at the height of the US financial crisis.
But market participants said the impact from this collapse, far smaller, would likely be contained.
"Ultimately it will have lost all confidence of its investor base," said Michael Epstein, a restructuring adviser with CRG Partners. "I'm not sure what restructuring it actually does. In some respects, it's a baby Lehman, in effect."
The New York Federal Reserve suspended MF Global from conducting new business with the central bank. CME Group Inc ICE Futures U.S. and Singapore Exchange all halted the broker's operations in some form.
Three traders wearing MF Global jackets were seen leaving the Chicago Board of Trade prior to the opening of pit trading, and floor sources told Reuters they had been turned away after their security access cards were denied. They declined to comment.
MF Global scrambled through the weekend and into Monday to find buyers for all or parts of the company, while at the same time hiring restructuring and bankruptcy advisers in case nothing could be done.
The company's shares and bonds plunged in recent days. In the past week, MF Global posted a quarterly loss, its shares fell by two-thirds and its credit ratings were cut to junk.
The company, which under Corzine ramped up more risky proprietary trading, is suffering because of low interest rates and the bets on European sovereign debt.
Corzine was trying to transform MF Global from a brokerage that mainly places customers' trades on exchanges into an investment bank that bets with its own capital.