Market Overview

CME Group Receives Two Subpoenas


CME Group (NASDAQ: CME) has received two subpoenas from authorities following the collapse of futures broker MF Global Holdings. The news was revealed by CME in a regulatory filing on Tuesday morning.

The very official requests for information and witnesses comes from a grand jury in Chicago and the Commodity Futures Trading Commission's enforcement division, according to the Chicago Tribune, via quotes from the CME Group from its annual financial filing with the Securities and Exchange Commission.

It was back on October 31 that MF Global, with former Goldman Sacks CEO Jon Corzine at the helm, filed for bankruptcy, with regulators still desperately seeking out approximately $1.6 billion in customer's money that apparently just disappeared in the days before the company imploded.

Any foul play, and there certainly appears to have been some dastardly doings throughout this whole mess, is obviously going to be taken extremely seriously, and the Department of Justice, the Federal Bureau of Investigation, the CFTC and the SEC are all conducting their own investigations with the clear aim of finding the money and bringing those responsible to justice.

"We continue to believe that we acted appropriately and that our actions do not give rise to liability," CME said in the filing. A CME spokeswoman declined to comment further.

On Monday, ValuEngine released a research report stating that it believes that CME should be trading at $368.95. This makes CME 20.75% undervalued. Fair Value indicates what it believes the stock should be trading at today if the stock market were perfectly efficient and everything traded at its true worth. “For CME, we base this on actual earnings per share (EPS) for the previous four quarters of $17.18, forecasted EPS for the next four quarters of $19.02, and correlations to the 30- year Treasury bond yield of 3.10%. There are an additional 10 firm specific and interest rate related parameters, each playing a role in the valuation analysis.”

At a financial services forum on February 9, CEO Craig Donohue said that CME took a lot of very positive steps to effectuate our globalization strategy in 2011. We had continued core business growth in non-US hours. We also really increased our global product offerings. And we also had a lot of great progress during the year in our clearing services area including significant up-take toward the latter part of last year in OTC clearing of interest rate and credit default swaps, very good initial traction and take-up of our CME Clearing Europe initiative, which I'll talk about various of these in just a few minutes, and then also very good performance, continued performance of ClearPort including in the first part of this year as well.”

Posted-In: News Legal


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