我是大医生2014:MF Global, Imperiled by European Bond Bet, Nears Deal With Interactive Brokers.

By AARON LUCCHETTI, JUSTIN BAER and MIKE SPECTOR

Jon S. Corzine, the former New Jersey governor, raced over the weekend to find a buyer for MF Global Holdings Ltd. in an attempt to rescue the securities firm he now runs from a crisis partially of his own making.

MF Global was nearing a deal late Sunday night to file for Chapter 11 bankruptcy protection as soon as Monday and sell assets to Interactive Brokers Group, said a person familiar with the matter.

 The tentative agreement, reached after a marathon weekend of negotiations, could end the short tenure for Mr. Corzine at MF Global.

Mr. Corzine, who took over as chief executive of MF Global last year, made big bets on sovereign bonds issued by European countries, according to people familiar with the situation. Those trades, which ballooned over $6 billion, helped knock MF Global's own debt ratings to junk and drained investors' confidence in the firm.

Under the tentative plan, MF Global's holding company would file for bankruptcy protection, the person familiar with the matter said. Interactive Brokers would then likely make an initial bid of about $1 billion during a court-supervised auction, the person said, though the deal was described as complicated and that number could change.
The sale would need to be approved by a bankruptcy judge. While the boards of both companies approved the tentative deal on Sunday, there are still other snags that could slow it down, according to participants in the deal.None of MF Global's regulated entities would seek bankruptcy protection, the person said."There is a handshake, but it [isn't] done yet," the person said. The odds are high the plan gets executed, but it is "very far from a done deal," the person said.MF Global's swoon is one of the most dramatic examples of the global ricochet effect caused by Europe's debt crisis. MF Global is the biggest potential U.S. casualty so far.The crisis began with fiscal troubles in Greece, which just received approval from European leaders for a second bailout. Investors are fretting that a number of other countries won't be able to pay all their obligations, which has hurt the values of sovereign bonds that Mr. Corzine purchased.The rapid decline of MF Global represents a stunning turn of events for Mr. Corzine. A former chairman of Goldman Sachs Group Inc., he took over at MF Global in March 2010, just four months after being voted out as New Jersey governor and two months after leaving office. He set out to change MF Global from a midsize derivatives broker to full-fledged investment bank that took risks with its own capital.In late 2010, Mr. Corzine started making big bets on bonds issued by European countries. He sometimes placed orders himself based on a list of prices left with an assistant, according to people familiar with the situation. Mr. Corzine, who made his name and fortune as a Treasury bond trader at Goldman, was convinced that sovereign debt from countries like Italy and Spain with high yields was a steal, these people said."Europe wouldn't let these countries go down," Mr. Corzine, who is also chairman of MF Global, told another executive at the New York City company early this year. When the lower-ranking official suggested that the trade was too big, Mr. Corzine brushed the concerns aside, responding that his career on Wall Street and in politics made him confident about the bets.Last week's broad agreement by European leaders gave troubled countries another chance to wriggle their way out of financial peril. But the 64-year-old Mr. Corzine is running out of time. MF Global posted a huge quarterly loss last week, though it blamed the shortfall on lower trading revenues and higher expenses, not the big bet on European sovereign debt.Nervous customers are fleeing—and taking their money with them, according to people familiar with the situation. Executives have scrambled to raise cash, including selling some of the European positions, the people said. Analysts, investment bankers and MF Global employees say the company likely needs to finalize a deal by Monday. Still, MF Global isn't big enough to pose systemic risk to the U.S. financial system if a deal can't be reached, according to people on Wall Street.Mr. Corzine, who led the negotiations Saturday as snow fell outside MF Global's midtown Manhattan headquarters, declined requests for an interview but hasn't backed down publicly from his European bet. "Our judgment is that our positions have relatively little underlying principal risk in the time frame of our exposure," he told analysts last week.On Sunday, lawyers at Skadden, Arps, Slate, Meagher & Flom were putting together a trove of documents to ready the possible filing. Weil, Gotshal & Manges restructuring lawyers were preparing to represent MF Global's London affiliate, said a separate person familiar with the matter. Restructuring lawyers at Sullivan & Cromwell are also advising the company, another person said.MF Global's roots go back nearly 230 years to a sugar brokerage on the banks of the Thames River in London. Spun off from a hedge-fund firm in 2007, it is one of the world's largest players in exchange-traded futures and options.Mr. Corzine's no-holds-barred bet on European sovereign debt last year stood out for its heft: MF Global's exposure was far greater than that at Morgan Stanley, a much larger securities firm also whipsawed in the past few months by European trades.It was the kind of gutsy trade that helped make Mr. Corzine a star at Goldman in the 1990s. "If it was a good trade for $100, he wanted to make it $1,000 or $1 million," a former colleague recalls.Supporters say Mr. Corzine's crusade to expand Goldman's fixed-income businesses made it easier for successors Henry Paulson and Lloyd Blankfein, who became CEOs of the New York company, to create one of the mightiest profit machines in Wall Street history.Mr. Corzine, the son of a grain farmer and teacher who grew up in Illinois, was blamed by some Goldman executives for poorly timed currency bets that suffered steep losses in 1994 when the British pound fell unexpectedly.Mr. Corzine was eventually pushed out as chairman in 1999 after championing the move to take Goldman public, despite objections of other partners.During his political career, Mr. Corzine went his own way as well. After taking office as New Jersey's governor in 2006, Mr. Corzine, a Democrat, pushed for a massive toll increase on toll roads to help the state's budget deficit. Critics denounced it as politically impossible, but Mr. Corzine "just wouldn't back down," says Stephen Sweeney, a New Jersey state senator who worked closely with Mr. Corzine on budget issues.Mr. Corzine ran for a second term in 2009 and was beaten by Republican Chris Christie.Mr. Corzine had been gone from Wall Street for more than a decade when an old colleague from Goldman, Christopher Flowers, suggested Mr. Corzine run MF Global. Mr. Flowers runs a private-equity firm, J.C. Flowers & Co., which took a big stake and a board seat in MF Global in 2008. Mr. Flowers's firm still owns a minority stake. He declined comment.Mr. Corzine took the CEO job in March 2010 with a plan to turn MF Global into a mini-Goldman. Instead of just futures and commodities trading, which generate commissions from clients, MF Global would make bets with the firm's own money.He set out on a five-year makeover, but it wasn't easy. Last year, stocks rose, but interest rates that MF Global relies on to profitably lend to clients stayed stubbornly low, hurting profits. "We have to take risks," he said in an interview.Last year, Mr. Corzine immersed himself in the idea of making bets on European sovereign bonds. He asked colleagues what they thought of the financial situation in Europe, talked to MF Global's risk officers and board of directors, and then starting putting on the trades in September, according to people familiar with the situation.Mr. Corzine oversaw the European sovereign-debt trades largely on his own even after hiring a new trading chief earlier this year, a person familiar with the matter says. In one quarter where the trade worked well, it represented 12% of the firm's revenues, according to Christopher Allen, an analyst with Evercore Partners Inc. Mr. Corzine regularly reviewed the positions with the company's directors, and he was allowed by the board several times to increase MF Global's exposure to Europe, these people said.Investors in debt issued by MF Global were pleased, too. In August, they lent the company money at a lower interest rate if Mr. Corzine stayed at the company instead of leaving for a federal-government post, such as Treasury secretary.One person who has worked with Mr. Corzine at MF Global says he was uncomfortable that so much of the firm's strategy essentially boiled down to a bet by Mr. Corzine on European bonds. "There was no one else at the firm who was helping him think about what to do on this trade," this person says.On Tuesday, MF Global said the positions added up to $6.3 billion as of Sept. 30. About two-thirds of the total is related to sovereign debt of Italy and Spain. In comparison, Morgan Stanley had $2.1 billion in net exposure to debt issued by the same countries and nearly 50 times as much cash and liquidity as MF Global.MF Global's exposure started drawing more attention as Europe's financial crisis deepened. In August, MF Global was told by one of its regulators, the Financial Industry Regulatory Authority, to move more capital to its U.S. brokerage unit because the European trades looked riskier, according to people familiar with the situation.Last Tuesday, MF Global reported a fiscal second-quarter loss of $186.6 million that caused its stock price to plunge 48%. The exact impact of the European bets isn't clear. "We look forward to coming back with better results," Mr. Corzine told analysts and investors.