The trustee overseeing the liquidation
of the failed brokerage has proposed dumping all remaining customer
assets—gold, silver, cash, options, futures and commodities—into a
single pool that would pay customers only 72% of the value of their
holdings. In other words, while traders already may have paid the full
price for delivery of specific bars of gold or silver—and hold "warehouse receipts" to prove it—they'll have to forfeit 28% of the
That has investors fuming. "Warehouse receipts, like gold bars, are
our property, 100%," contends John Roe, a partner in BTR Trading, a
Chicago futures-trading firm. He personally lost several hundred
thousand dollars in investments via MF Global; his clients lost even
more. "We are a unique class, and instead, the trustee is doing a
radical redistribution of property," he says.
Roe and others point out that, unlike
other MF Global customers, who held paper assets, those with warehouse
receipts have claims on assets that still exist and can be readily
A substantial portion of MF Global's commodity clients cleared their
transactions through the Chicago Mercantile Exchange and Comex, owned by CME Group
CME). The question now looming over CME's stock is whether the company
will be liable for customer losses.
CME, which also owns the Chicago
Board of Trade and Chicago Board Options Exchange, runs markets for
futures contracts and options on futures, interest rates, stock indexes,
foreign exchange and actual commodities.
CME's stock, which had been as high as
$327 over the past year, has slid to a recent $242 as a result of low
trading volumes and uncertainty about the MF Global scandal.
The Customer Coalition may eventually press its case with the
exchange operator. "If it turns out the only way we get customer money
back is [to] go after the CME, then we'll go after the CME," says