MarketWatch.com - Pre-Market Indications

Friday, February 29, 2008

Rogue trader loses $141.5m betting on wheat

Rogue trader loses $141.5m betting on wheat
Commodities broker MF Global has sacked a trader after discovering a loss of $141.5 million (£71.3 million) representing six per cent of the company's equity.

MF Global, which was spun off from UK's Man Group last year, blamed a failure in one of the company's retail order entry systems which enabled the employee to trade in the wheat futures market in his personal account.

The US-based broker, named as Evan Dooley by newspapers, "substantially exceeded his authorised trading limit" according to the company.

MF Global said it is responsible for the loss and has recorded a bad debt provision for the full amount, emphasising that client funds will not be affected.

In addition, the company has hired a third-party risk technology consultant to review its relevant order entry systems.

Last month, French bank Societe Generale admitted one of its traders, Jerome Kerviel, made unauthorised trades for months before his huge losses were discovered.

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