Bloomberg is reporting that MF Global gave JP Morgan assurance that the failed brokers transfer of customer funds to pay an overdraft was allowable:
The assurance was given by an MF Global treasurer, Edith O’Brien, or someone in her office, after JPMorgan wrote asking for confirmation that the transfer was in accordance with regulations, said the person, who declined to be named because the communications were private.
While the fact that some $200 million in segregated customer money was transferred to JP Morgan has been previously known, this is the first time it has emerged that MF Global told JP Morgan that the transfer was allowable.
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