Fitch places MF Global ratings on watch negative following sudden switch of chairman, CEO

Fitch places MF Global ratings on watch negative

NEW YORK — Fitch Ratings on Thursday said it placed the ratings of MF Global Holdings Ltd. on rating watch negative after the brokerage’s sudden replacement of its chairman and chief executive.

Late Tuesday, MF Global named former New Jersey Gov. Jon S. Corzine to both titles, replacing CEO Bernard Dan and Chairman Alison Carnwatch.

Carnwatch’s term was set to expire in August.

Fitch also said the negative status reflects “less than favorable internal capital generation.” The brokerage posted a fiscal third-quarter loss in February, and its fourth-quarter guidance predicts revenue below Wall Street’s expectations.

Corzine, a one-time U.S. senator who is also a former chairman of Goldman Sachs Group Inc., is taking over immediately, but has no prior experience with MF Global, Fitch noted.

To help the transition, Dan will remain with the company until May, and Carnwatch until August.

MF Global in January officially moved to the U.S. from Bermuda, after weathering difficulties in recent years following a 2008 scandal involving a rogue trader. Dan took over as CEO that year.

Besides the move, MF Global reorganized its U.S. equity business to expand its derivatives, portfolio trading and electronic trading services teams, and reaching a deal to sell its interdealer broker business.

MF Global shares rose 5 cents to $8.13. The stock gained 10 percent on Wednesday, the first session following the leadership change.