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April 17, 2013

Former MF Global Trader Sentenced to 5 Years for Rogue Wheat Trades

A Chicago court on Tuesday sentenced a former commodities trader for MF Global Holdings Ltd.to five years in federal prison for placing rogue trades that badly damaged the brokerage five years ago.

Evan Brent Dooley, who worked as an “associated person” in MF Global’s Memphis, Tenn. Office, also was ordered to pay $141 million in restitution, matching the size of the loss taken by MF Global due to his unauthorized trading in wheat futures.

Mr. Dooley pleaded guilty in December to futures-trading violations in the matter, which sent MF Global’s share price plunging 93% at the time and raised questions around the firm’s risk-management practices. Some of those issues remained unaddressed three years later when Jon Corzine, the former New Jersey governor, took over the firm, according to the trustee liquidating the parent of the now-defunct company.

MF Global collapsed in October 2011 due to the firm’s outsized trades on European sovereign debt, overseen by Mr. Corzine.

Mr. Dooley’s trading sent waves through U.S. wheat markets in February 2008 and helped set in motion events that led to MF Global’s eventual collapse. The episode triggered senior leadership changes at the firm and brought in private-equity investor J. Christopher Flowers, who in 2010 helped bring aboard Mr. Corzine as MF Global’s chief executive.”

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Read full Wall Street Journal article here

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