MF Global gets pounded by rumour and conjecture
20 Mar 2008
by Paul Francis-Grey, Jim Kharouf
Call it the St. Patrick’s Day Massacre. MF Global suffered the worst of it on March 17, losing 65% on its stock price, as the firm faced a storm of negative news and inaccurate rumours about credit lines and investors. The firm, which went public last July, opened the week trading at $16.11 and watched its share price freefall to a low of $3.64 at one point before rebounding and closing at $6.05. By March 18, shares had recovered somewhat closing at $8.17.
One big reason for the drop was a rumour that Joe Lewis, the British billionaire who lost $900m on his investment in Bear Stearns, was also a client of MF Global. The brokerage issued a statement on the afternoon of March 17 saying its credit lines and operations were in good standing and added that Lewis was not a client. CME...