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 value.
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 identified.
A substantial portion of MF Global's commodity clients cleared their transactions through the Chicago Mercantile Exchange and Comex, owned by CME Group (ticker: 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 Koutoulas.