MF Global Fires 1,066 Brokerage Employees As Firm Goes Bankrupt
It’s one thing to lose a job of a few years without a warning, but it’s another thing to find out from a group email or the news. That’s the exact scenario that played out at MF Global on Friday, November 11th, when the brokerage firm fired all of its 1,066 employees, many of whom never received the memo personally. Instead, they found out by watching the news on television or from an email that was sent to all employees. The atmosphere at the Manhattan office filled up with anger and resentment as boxes of personal belongings were packed and chaos ensued. Talk about loyalty and a code of ethics.
Reason and Reaction to Job Loss
MF Global went bankrupt partly influenced by the European debt. There was confusion when the terminations were announced, but employees were expecting to lose their jobs. They were aware that the company was going bankrupt and feared that the news would hit their ears sooner or later, but they were confused that the news was presented to them this way. One employee shouted, “Fifteen years and no severance!” Other employees, who had been loyal to the firm for years, reacted similarly. MF Global analysts regret this outcome as they believe that this company “had a lot of potential.”
The company’s trustee, James Giddens, is looking to locate the assets of the brokerage, including a missing $600 million in customer money. MF Global’s U.S. exchange regulator, CME Group Inc., will provide $300 million necessary for the trustee to release frozen customer funds. The trustee stated that about 17,000 commodities accounts worth $1.5 billion will be transferred. “The termination of employees and closure of operations is a necessary part of the court-ordered liquidation…,” Giddens said.
Number of Unemployed Workers Grows
A statement released by Giddens who’s in charge of liquidating the brokerage states that the workers were terminated immediately but will be paid through November 15. About 200 employees will be rehired to help close everything up. The fact that MF Global has just added over a thousand workers to the unemployed may not have a huge impact on the U.S. unemployment rate, but the now former MF Global employees have to worry about finding new jobs, a process that usually lasts 12 to 18 months. Since other brokerage firms are also letting workers go due to declining trading profits this job search may last even longer.
Many of the employees didn’t want to leave this job and are disappointed in the “people at the top,” including New Jersey Governor Jon Corzine, who was the CEO until resigning last week. They knew the news was coming because MF Global was going bankrupt, but the media began reporting the news before all of the workers found out their job status. The bankruptcy came as a shock to Wall Street, but already last week, Corzine had resigned, “saying he would not seek about $9 million in severance,” as stated by NBC.
MF Global employees are in the process of searching for jobs, a task easier said than done. News like this affects the trust of customers, who are pulling out their funds from MF Global and other firms, leading to bad liquidity and an overall bad look for the market. Federal agencies such as the Securities & Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are investigating whether the money missing from customer accounts may have been mixed with the firm’s funds.
This is the worst news that MF Global employees could have received, especially since it was without warning. Not only were they forced to leave the offices right away, but they also won’t receive any financial backup after November 15th. For some, this may be the beginning of a better journey, but for others the loyalty and trust have just been irrevocably broken.
NOTICE: This article was based on research of stock market information and other sources of information, found both online and in print media. Neither StockTips.com nor any of its owners, contributors, officers, directors, consultants, or employees take responsibility for the accuracy of the information contained in this article or the accuracy of the information on which this article was based. StockTips.com was not compensated by any of the companies mentioned in this article for the preparation of this material, nor were the materials approved by the companies which were mentioned.
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