U.S. farmers and ranchers who had accounts with failed broker MF Global have got back the bulk of their money, but are still owed about $100 million.
The $100 million is believed to be part of MF Global customers’ $1.2 billion in funds that remain missing after the chaotic flame-out of the broker.
Thousands of MF Global clients have received about 70 per cent of their money held in segregated accounts since the broker filed for bankruptcy Oct. 31.
The Chicago Mercantile Exchange says on March 1 it will launch a $100-million fund to protect farmers and ranchers who used grains and livestock futures markets operated by the exchange against similar fiascos in the future.
“We based the fund size on what they are still missing following MF Global,” said exchange spokesman Michael Shore. “If a similar event were to occur, the Protection Fund would get each eligible participant much closer to whole — up to $25,000 for individual farmers.”
Farmers and ranchers, still tending raw wounds from the bankruptcy, said the $100-million plan amounted to “window dressing.”
“It seems like a good business decision to restore confidence in the company, but it’s woefully inadequate,” said Dean Tofteland, a Minnesota corn and soybean farmer who has retrieved 72 per cent of the $253,000 held in his MF Global account. He said he would get back just over $2,000 from the CME fund based on a hypothetical case in which $1.2 billion in customer funds are missing — a scenario similar to MF Global’s current situation.
Many Midwest farmers had to delay purchases of seed and equipment in the days after the bankruptcy.
Joe Ocrant, an investment adviser whose clients include feedyard operators, said the fund was well short of what the “big hedgers” need.
“Some of my bigger clients hedge up to $1 million,” he said.