MF’s main business was executing and clearing trades for clients. The company was a dinosaur. It still took most of its orders over the phone, long after the industry had shifted to electronic trading. Not surprisingly, MF reported net losses for each of the past four fiscal years. Its $186.6 million loss last quarter was its biggest.
Most of the quarter’s red ink came from writing down something called deferred-tax assets. Basically this item represented the money MF had thought it would save on taxes in the future, assuming it would be profitable. Net deferred taxes stood at $108.3 million as of March 31, according to MF’s 2011 annual report, which was the last time the company provided a detailed tax footnote.
MF wrote down that figure entirely last quarter. In essence, MF’s executives were admitting they couldn’t figure out how to make money.
Interesting take on the real reason which led to the fall of MF Global. Read the complete report here
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