CME Group, Citing MF Global Bankruptcy, Halts Charitable Grants

By Chuck Sudo in News on Dec 19, 2011 10:00PM

Last Friday Illinois Gov. Pat Quinn signed into law nearly $300 million in tax breaks for CME Group, CBOE Holdings and Sears the three companies said was necessary for them to continue to call Illinois home. CME Group at least waited for the ink on Quinn's signature to dry before they announced they would halt meting out grants through its charitable arm, CME Group Foundation.

The reason CME gave for the decision is the collapse of MF Global Holdings Inc. MF Global filed for bankruptcy protection on Oct. 31, six days after posting a $191.6 million loss trading on European government bonds. As a result, $1.2 billion in client money has vanished in thin air. John Lanchester, in the London Review of Books, compared the timing of the stock bets to "making a huge punt on the prospects of airships, just as the Hindenburg set out on its final voyage."

This has led to the Senate Agriculture Committee issuing subpoenas to MF Global, and former New Jersey governor, Jon Corzine. Corzine is the defendant in nine lawsuits filed in a federal court in Manhattan related to the scandal. The SEC is also conducting a review of MF Global trades in the days leading up to the bankruptcy filing to determine if any insider trading was committed.

Last month CME Group announced it would give the full $50 million in the CME Trust to MF Global clients. The Trust was established in 1969 to give financial assistance to customers if a brokerage firm like MF Global became insolvent. In 2005, CME's board of directors voted to turn the Trust into a charitable foundation which has given over $22 million to Chicago-area charities and schools over the past five years. When it was discovered that MF Global clients' funds went missing, CME's board voted to revert the CME Trust back to its original intent. All of this is serving to fuel the fires of the Occupy movement.

CME spokeswoman Laurie Bischel said the company is committed to honoring grant recipients down the line, even after the $50 million has been paid out. They just wouldn't say when.

"Though the CME Trust will be used to help customers of MF Global, CME Group remains committed to our communities and will continue to provide support to charitable organizations as possible through our other programs and corporate foundations."