Ratings agencies quizzed over MF Global
Moody’s Investors Service “did not have any understanding” that MF Global, the failed futures broker, had placed a $6.3bn proprietary bet on the debt of troubled European sovereigns until about a week before the brokerage filed for bankruptcy, despite MF Global’s disclosure of the gamble some five months earlier in May.
The revelation, made in a letter by the agency to Congress, comes as US lawmakers plan this week to grill executives at Moody’s and rival Standard & Poor’s on what they knew and when ahead of the broker’s collapse on October 31.
The bankrupt brokerage is in lawmakers’ crosshairs due to some $1.2bn in missing customer funds. Three months after MF Global’s failure, investigators have yet to determine the whereabouts of the missing cash.
S&P participated in a conference call on August 31 with MF Global’s top executives at which the agency was told that the brokerage’s regulators required it to boost the amount of capital held against those bonds, a disclosure MF Global made the next day to investors.
full: http://liveweb.archive.org/http://www.ft.com/cms/s/0/7546a9ee-4a88-11e1-8110-00144feabdc0.html