MF Global cuts 165 jobs, more to come

Employees of MF Global's U.S. brokerage unit may be girding for layoff notices following the termination of 165 finance, IT, human resources and other back-office staff over the last two weeks.

Those already laid off aren't part of the 1,066-strong brokerage unit of traders, brokers and salespeople, but another entity that once had 250 employees, according to a source familiar with the firm.

MF Global Inc., the broker-dealer, is being liquidated after the parent company, MF Global Holdings Ltd., declared bankruptcy Oct. 31 under Chapter 11 of the U.S. Bankruptcy Code.

In a notice to customers today, MF Global's trustee reiterated that the broker-dealer is being wound down and not reorganized. Termination notices for brokerage employees haven't yet been sent by the trustee, said a spokesperson. The trustee, James W. Giddens, a lawyer with New York-based law firm Hughes Hubbard, is also liquidating Lehman Brothers Inc., which went bankrupt in 2008, helping spur the financial crisis.

Layoffs at MF Global have occurred in a "piecemeal fashion" in New York and Chicago, said another source close to the firm. "I would only be speculating as to why the trustee has not swung the boom more broadly," the source said.

Many already terminated employees haven't received severance pay, deferred compensation or bonuses, nor are they assured of receiving health coverage beyond November, raising the potential that non-reimbursable medical expenses will be incurred, the source said.

The brokerage unit, headquartered in New York, employs staff in New York, Chicago, San Francisco, Boston, Kansas City, and Washington D.C.

Aside from the question of the fate of the company's employees, an estimated $600 million in customer funds is missing, though the trustee's office said it won't know the extent of the shortfall until an investigation is completed by the Department of Justice and the Commodity Futures Trading Commission, among others. The office declined to provide a timetable for the investigation.

Source: FNS