MF Global Holdings Ltd's bankruptcy has sent shockwaves through a little Iowa town, where a local broker said he felt a moral obligation to guarantee more than $1 million in funds he placed for farmers at the futures brokerage.
Ken Ries, the 62-year-old owner of Ries Ag Marketing, has been clearing through MF Global and Refco since opening his commodity brokerage and grain dealer in 1987.
In an interview from his home in the farmland outside of Ryan, Iowa, Ries said he might wind up covering client funds -- all from farmers in eastern Iowa -- that have not yet been accounted for. MF Global and its regulators are searching for some $600 million worth of funds that went missing in the chaos of its bankruptcy this week.
MF Global did not immediately return a request for comment. Neither MF Global nor Jon Corzine have been charged with any wrongdoing. Corzine, a former chief executive at Goldman Sachs & Co, stepped down as MF Global Holdings Ltd's chairman and chief executive on Friday.
Ries, whose family still operates farms in the area, said he sent a letter to more than 100 aggrieved clients who have been waiting for their money since MF Global filed for bankruptcy.
He promised to cover any funds that MF Global did not reimburse -- "every penny guaranteed" -- once all the regulatory investigations and litigations had been completed.
Ries expressed frustration at the lack of information from MF Global and what he described as a lack of accountability by regulators and Corzine.
On Friday, Corzine expressed "great sadness" about the firm's bankruptcy and its impact on clients and employees.
Reis said calls to MF Global offices have mostly been met by busy signals. When he reached representatives on the phone, they were unable to provide him with any concrete information on when his clients' money would be available.
The bankrupt brokerage, however, transferred 58 percent of his clients' accounts to a new clearing firm, ADM Investor Services, on Friday. Ries is hoping accounts that have cash but no open trades will be transferred over the weekend.
"My clients have been pretty disgusted all week with the way MF Global has been handling it," said Ries. "They've been led to believe over the years that the money was somewhat self-insured with the industry and I was too."
(This version corrects that broker Ries has chosen to guarantee funds, not that he has to, paragraphs 1, 3)
(Reporting by Lauren Tara LaCapra in New York)