Devoted to Managers and those that seek to improve their management skills

In an incident that doesn't fare well for MF Global (NYSE:MF), the company was stung by a rogue trader who cost them $141.5 million in losses before he was caught.

Evan Dooley traded in wheat contracts far beyond his limit, and existing measures weren't enough to catch him before the damage was done.

This isn't just a big loss for the company, it's a huge hit against their reputation, showing they don't have the ability to manage risk; an absolutely necessary ability and skill in the world we live in.

It's especially bad because of the recent magnitude of losses at the French company Societe Generale, which were taken for an enormous $7 billion by Jerome Kerviel just weeks ago. To not have measures in place to stop these types of actions is unconsciable.

Even if the company gains back most of the losses through their insurance policies, it will definitely taint their image for some time to come, as it should.

CEO Kevin Davis said in a conference call that "This is an absolutely awful event, but we believe it was an aberration in our risk control. We are deeply, deeply upset that this has happened, but we believe we've fixed it and it will never happen again."

Supposedly the computer system employed by MF Global was set up to stop this type of trade. Obviously it was a faulty system, and wasn't being tested consistently to ensure it would do its job. There was an entry-order system in place that the company asserts should have stopped the trade.

So this is an aberration? Sounds like a screw up to me. How do you have a $141.5 million aberration which allows a trader to go way beyond the money alloted to them to trade? It doesn't happen. Something is wrong with that explanation.

I would like to know how much Dooley exceeded the amount he was allowed to trade. Did he have far too much money at his disposal in contrast to company revenue?

MF Global Ltd. ended up losing a fifth of its market value after the debacle, which ends up being about 72 cents a share, according to Credit Suisse analyst Howard Chen. That's about half the profit that was projected for 2008.