MF Global Holdings (NYSE: MF ) is not long for this world. The financial
companys shares were frozen from trading Monday on news that big losses on risky
debt investments had sunk the investment bank and forced it into Chapter 11
bankruptcy protection. Despite a $3 billion IPO, despite a storied pedigree with
U.K. hedge fund manager Man Group plc, and despite the politically connected
former Goldman Sachs (NYSE: GS ) exec at the helm, the financial firm just
couldn't cut it. But the real lesson of MF Global is we have so many lessons
left to learn when it comes to the risk in the financial sector these days. Even
after the worst banking crisis since the Great Depression and the stark reality
of risk taking, MF Global couldn't control itself. And even after the "smart
money" got burned with a roughly 40% market decline in 2008 and a choppy
market to start 2011, MF Global leaves some of the biggest investment names on
Wall Street to clean up its mess. According to columnist David Weidner's tally
, as of Oct. 30, Fidelity Investments parent FMR Corp. owned more than 8% of MF,
with other insurance, pension and financial firms making up a big chunk of the
rest of the company. MF Global is not just a story about yet another financial
firm that can't cut it. This justifiably can be called one of the most
difficult times on Wall Street in many of our lifetimes. A host of political and
macroeconomic issues compete for investor attention, while at the same time
triple-digit moves in the Dow based wholly on sentiment seem to be the order of
the day. No, the real story of this defunct financial stock is that there are so
many more lessons that investors, regulators and bank CEOs must learn. Here are
a few pointers some obvious, and some not:
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