Hire Wire Oct 31 2011

Are MF Global Employees the New Lehmanites?

By julie steinberg

MF Global Holdings has left almost 2,900 employees in limbo after filing for Chapter 11 bankruptcy protection in New York this morning.

Chief Executive Officer Jon Corzine, a former CEO of Goldman Sachs and a former governor of New Jersey, effectively failed to turn the broker-dealer into a full-fledged investment bank. His backup plan to sell MF Global to Interactive Brokers Group Inc. also fell flat.

The bankruptcy will affect employees in 19 offices in 11 countries around the world. The firm employs traders, equity research analysts, salespeople and global policy analysts. It's not immediately clear how severance packages and their pensions might be affected.

The bankruptcy is likely to be among the ten biggest bankruptcies ever, Deal Journal reports, with the company sitting on $41 billion in assets and more than $39.98 billion in liabilities.

It's also not immediately clear whether Corzine, 64, stands to collect the $12.1 million in severance pay, bonus and other benefits that was built into his contract should there be a takeover of the firm.

A spokesperson did not return a request for comment.

Over the past 18 months, since Corzine took the CEO position in March 2010, 1,400 employees have either left voluntarily or been fired, and 1,100 have been hired, a spokesperson previously told FINS. The firm had been building up sectors like commodities and global research while laying off equity salesmen in an attempt to compete with global investment banks and expand beyond its traditional role as a broker-dealer.

In late 2010 Corzine made big bets on European bonds, thus increasing the bank's exposure to the simmering debt crisis. He took risks with the bank's own capital.

The European debt crisis, coupled with a generally weak market, has resulted in layoffs at banks across the world. Nomura is said to be planning to announce deep cuts in its European operations when it reports third quarter earnings on November 1. HSBC is also shedding jobs in Europe.

Write to Julie Steinberg at Julie.Steinberg@dowjones.com




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