By a former Goldman sachs chairman, Michael essien (Jon Corzine) of futures brokerage business well-known Global ord's financial (MF Global) has set up a file in bankruptcy protection on Monday, this is the seventh largest scale since 1980 the company.
The company's history can be traced back in the 200 years ago, but the family Michael essien less than two years under control. Global ord's financial bankruptcy is the main cause of its holding in hand nearly 6.3 billion European sovereign state bonds, including Italy, Spain, Portugal, etc. It is these sovereign debt makes the company slashed produced huge losses, and then into the fate of bankruptcy.
Analysts say, the reason of Michael essien will so much, under the European sovereign debt money because he wanted on the global ord's financial transformation, such as Goldman sachs for the same big company to. Goldman sachs may represent their clients to trade, at the same time it will be their own funds invest in stocks. In the event, the global ord's financial accounting methods and relevant disclosure principle may be part of the reason the collapse.
Submit the global ord's financial submit the bankruptcy petition 24 hours, many negative events all surface. The New York times reported writes, the regulators have found hundreds of millions of dollars in money disappear, the Associated Press in his article points out, federal officials said that at present the global ord's financial has admitted that use the customer money on proprietary trading. At present, this is what insiders or internal control management to loose still needs further observation, global ord's financial are not willing to respond to it.
Cause global ord's in the current status of financial embarrassment is the root of: the company's core business profits fell sharply. Global ord's financial in the bankruptcy application materials submitted, said the company operating income from most of the cash in their accounts will invest in high returns on assets obtained by the interest income, and the company also earn income and to pay the difference between the customer. But as the interest rate fell sharply in recent years, the world's financial, the net interest revenue from 2007 in the second quarter fell to $1.8 billion to $113 million. In the end of 2007, the company's stock price is $30 per share, in the 2009 years ago has shrunk to $10.
2010 the second quarter, families have a lot of sovereignty of Michael essien net debt DuoTou positions, totaled us $6.3 billion, equivalent to the company tangible equity rights (tangible common equity) five times the size of the. At the time of investment highly controversial, but secco essien or go it alone. In early August, 2010, global ord's financial for a bond trading launched initial offerings books (preliminary prospectus), and promised to investors, if families essien can be President of the United States to appoint a federal position, then paid to the extra 1% gain.
As the world's financial in application) mentioned for the trade financing is through the so-called expire repurchase way, bonds itself was used as a loan guarantee. Global ord's financial made bond yields and to repurchase the price difference between the party pay.
The key is to accounting purpose. Global ord's financial application material shows that these deals are regarded as a sale transaction processing. This means that the relevant asset and liability on the balance sheet from the removed. This makes its sovereign debt risk exposure will not included in its value at risk (value-at-risk) of the calculation. This also means that the global ord's financial when selling the has confirmed trade gains. This can be a very good cover up the company's core business of the real weak.
On October 24, 2010 trading, the global ord's financial announced that families to join the company of Michael essien, its share price from $10 level fell by 62%. Then come down the company moody's debt rating, and said it could not gave birth to the $200 million to $300 million in pre-tax profit, and it cannot be leveraged level to maintain in the range of acceptable. In other words, moody's to the company the profitability of the company's questioned. On the second day, the global ord's financial announced that its hold position size for 6.3 billion us dollars, and in the September quarter as the losses of $200 million. This week in the weekend, the big three all its rating agencies will come down to junk level. Moody's said, come down reflect the company for European sovereign debt investments in the risk that its core business the profitability of the sell at a discount greatly. Michael essien says, the agencies cutting behavior by causing market recovered the requirements of the deposit, this makes the company's cash further dried up.




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