Remember that one time we said that the industry needed to rise up and make MF Global clients whole? Well, we still stand by that statement, but this isn’t exactly what we meant by it. From the Wall Street Journal:
Customers of the failed securities firm MF Global Holdings Ltd., who have been awaiting the fate of $1.6 billion in missing funds, have received an offer for their funds from Barclays Capital that would make them nearly whole. The U.S. unit of Barclays PLC has offered to pay customers with U.S. accounts 90% of their entire original claim in exchange for the right to any additional funds that might be returned, according to people familiar with the matter.
At first glance, this is exciting news… until you start to think about it. The looming question is why are they doing it? For starters, that’s a pretty big risk to take on blindly, which makes us wonder whether they know something the public (and particularly, MF Global clients) doesn’t. If they do- then this is little more than a business play. If they know where the money is and feel confident they’ll be able to get it, assuming every one of the MF Global clients who are missing money participated, they’d stand to make a profit of $1.6 million on the deal. We’re not much for conspiracy theory, so we’re hoping that’s not what’s going on here, but it does make you wonder what the motivation for the offer is. Are UBS and Barclays making a play for more retail business? Again, seems like a stretch to us. Maybe it’s because it’s the right thing to do?
What’s the biggest stretch?
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