MF Global failed on October 31, 2011, producing the eighth-largest bankruptcy in US history and the largest commodity brokerage collapse of all time. While this is not the first time a major brokerage firm has failed, what sets MF Global apart is the fact that $1.2 billion in customer funds were missing at the time of the failure, and still remain missing three months later. This shortfall affects approximately 38,000 futures brokerage accounts, a large percentage of which were held by individuals and entities in the agricultural sector.
The Commodity Exchange Act and Commodity Futures Trading Commission (CFTC) regulations require funds in customer futures and options brokerage accounts to be segregated from all other money, securities or other property owned or controlled by the brokerage firm. The funds from all customers can be commingled in a single account, but they must be separately accounted for, and must be treated as belonging to the customer.