Indiana Grain Company, LLC

Posted: 11/02/11

By: tomgrisafi

Even Lindsay Lohan is having a better week than the folks at MF Global.

CME Group Inc, the main exchange regulator of bankrupt brokerage MF Global Holdings Ltd, said it appears that any transfer by the broker of its customer segregated funds happened after a CME audit last week, and may have been designed to avoid detection.

CNBC was first to report the above on Wednesday afternoon.

"With respect to the apparent shortfall in customer segregated funds held by MF Global ... it appears that any transfer of such funds occurred following the completion of CME audit procedures respecting such funds and in violation of CFTC Regulations and CME rules," CME said.

"It now appears that the firm made subsequent transfers of customer-segregated funds in a manner that may have been designed to avoid detection," the exchange added.

MF Global "did not disclose or report such transfers to the CFTC or CME until early morning on Monday, October 31, 2011," CME added in the e-mailed statement.

MF Global filed for bankruptcy Monday. The following day, MF Global failed to segregate the funds, a violation of a key futures brokerage rule, the CME reveals.

"CME said on Wednesday that last week's review indicated that MF Global was in compliance with a requirement for the broker to segregate customer funds from its own funds," CNBC confirmed.

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