MF Global's original sin

But more importantly, with approximately $5.5 billion in segregated customer assets and an identified $633 million (at the time) shortfall in customer funds, how could MF Global Holdings, a self-identified brokerage firm with the bulk of all earnings from its brokerage unit, rush into a Chapter 11 reorganization and not Chapter 7, which is required for liquidation of brokers? 

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Criminal negligence and bankruptcies happen all the time, but with so much customer property gone while regulators literally were on-site, this event was a massive regulatory failure. This bankruptcy structure not only positioned creditors and MF Global executives with the best possible stance, but also allowed regulators to take a backseat to the bankruptcy proceedings and point fingers of responsibility at each other.