Investment firm reportedly looking to shed assets in bankruptcy By Greg Morcroft, MarketWatch NEW YORK (MarketWatch) — The Federal Reserve Bank of New York said on Monday that it has suspended MF Global from conducting business with the bank. “This suspension will continue until MF Global establishes, to the satisfaction of the New York Fed, that MF Global is fully capable of discharging the responsibilities set out in the New York Fed’s policy,” the local arm of the Federal Reserve said in a statement. Conversely, the New York Fed said it could decide to terminate MF Global’s status as a primary dealer. The latest move comes after The Wall Street Journal reported late Sunday that the broker-dealer MF +10.00% was near a deal to sell off assets to Interactive Brokers Group Inc. IBKR +0.20% and file for bankruptcy protection as soon as Monday. The paper reported that tentative deal would involve a Chapter 11 filing followed by Interactive Brokers making an initial bid of about $1 billion via a court-supervised auction. It said that both companies’ boards of directors have approved the plan, hammered out by MF Global Chief Executive Jon Corzine, who previously served as chief of Goldman Sachs Group Inc. before becoming first a U.S. senator and then the governor of New Jersey. As of Sept. 30, 2011, MF Global had 2,894 employees. Also Monday, Hong Kong’s stock exchange said that MF Global’s local unit has been “meeting its financial obligations.” The exchange said that MF Global Hong Kong, which is a clearing participant of the exchange’s securities and derivatives clearing houses, has been settling outstanding positions in an orderly manner. Read coverage of MF Global on MarketWatch “HKEx will continue to monitor the developments ... and assess the updated information and circumstances to determine what additional action, if any, is required,” it said. Greg Morcroft is MarketWatch's financial editor in New York.

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