MF Global Ltd. MF (NYSE), the futures and options brokerage firm, announced today that CEO Kevin Davis resigned fro
m his position as CEO and board member effective immediately. Davis had been with the firm for seventeen years. Back in February of this year the company made public a rogue trading scandal within the company. According to a story by Stephanie Baum of Dow Jones’ Financial News dated February 28, 2008,
Evan Dooley, who worked at the Memphis branch office (MF Global) in the US, was discovered working in wheat futures via the Chicago Board of Trade at a level that “substantially exceeded his authorized trading limit.” MF Global terminated Dooley shortly after the discovery.
The company’s share price fell 27.6% at the close of trade to $21.19 on Thursday. Its share price fell a further 19.7% on Friday to $17 as of 1:54 pm EST. When the company went public this past July, its opening share price was $31.
In addition, Standard & Poor’s Rating Services and Moody’s Investors Service cut the broker’s credit rating on Friday. S&P lowered its long-term counterparty credit rating to BBB from BBB+. Moody’s lowered its long-term credit rating to Baa1 from A3.
From that point onward the company has been struggling. According to a story by Kevin Kingsbury in the Wall Street Journal,
Shares of MF Global have lost 93% of their value this year, including 48% this month alone, following a rogue trading scandal that wiped out the prior year’s earnings, raised concerns about its risk-management policies and triggered a dilutive refinancing with private equity firm J.C. Flowers & Co. LLC in May.
With the announcement of Davis’ resignation the company appointed current president and chief operating officer Berna
rd Dan as his replacement. Dan joined the firm back in June. Prior to his appointment, Dan had led the Chicago Board of Trade (CBOT). Last year the CBOT was acquired by the CME Group Inc. Dan was the CBOT’s president and CEO for close to five years prior to the acquisition. Dan has come in to stabilize the firm. We will just have to wait and see how the changes play out and exactly what Dan can do to turn the firm around. It will be a tough road.
No comments:
Post a Comment