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What MF Global Holdings Fiasco Means For Transparency

Having visibility into financial records can prevent corporate surprises.

Investors and CFOs should be on the lookout for records that "window dress" their companies' financial state, as demonstrated by circumstances surrounding MF Global Holdings, which recently filed for bankruptcy protection. Federal regulators are also investigating where $630 million of customers' money that is currently missing could have gone, The New York Times reports.

According to analysis from The Wall Street Journal, the company was able to hide its debts by borrowing money right before filing its reports to investors. "The activity … suggests that the troubled financial firm was shouldering more risk and using more borrowed funds to facilitate its trading than investors could easily detect from the firm's regulatory filings," the news outlet reports. The situation could be a warning for other investors to perform their due diligence before putting money in an organization.

The firm's CEO and chairman, Jon Corzine, was the former co-CEO of Goldman Sachs Group and resigned from his current post on Friday, Bloomberg reports. He said in a statement that the decision would be better for stakeholders and the company. With Corzine at the helm, MF Global invested its own funds in European sovereign debt and increased its risk, the source says. 

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