Thomas Peterffy, Pro-GOP Ad Buyer, Called Shady Wall Street Chieftain

Thomas Peterffy
Thomas Peterffy
Thomas Peterffy’s a name you’ve probably never heard of until a run of pro-GOP ads that have been played again and again on YouTube and on CNN.

The ad starts out with “I grew up in a socialist country…” and goes on to talk about his fear that America’s becoming socialist. Here’s the video, which this blogger is tired of seeing because it’s played so much:

Thomas Peterffy is a 66-year-old Hungarian-Born billionaire, who was one of the fathers of electronic trading, going back to the 70s. While much has been written about Thomas Peterffy’s massive round of self-buying of air time to blast his face all over the place, little has been written about his “shady” dealings of late.

His firm, Interactive Brokers Group, of which he’s Chairman and CEO, was in hot water with the SEC because of his 2011 purchase of 8 million shares of MF Global, the firm ran by former New Jersey Governor John Corzine.

Mr. Peterffy did this before MF Global, which is a rival firm that does the same kind of electronic trading work that Interactive Brokers Group does, went bankrupt after suffering a cash loss amid disclosures that the firm made huge investment bets on the sovereign debt issued by troubled European nations.

The New York Post called Thomas Peterffy “a shady Wall Street chieftain,” because his actions look like an attempt at insider trading. In other words, Peterffy’s a lot like Gordon Gekko, rushing in to buy up shares in a weak company. Trouble is, this firm is a rival, which brings up charges of conflict of interest in addition to the appearance of insider trading.

For his part, Thomas Peterffy claims to have backed off the deal and because of the discovery of $1.6 billion in missing money. Yes. $1.6 billion in missing money. But Mr. Peterffy’s actions do have the look of at least an attempt at insider trading. Consider this paragraph in Fortune from June 4, 2012 on the history of the MF Global financial collapse:

Thomas Peterffy, the Hungarian-born billionaire who founded Interactive, had been drooling for years over the prospect of combining MF Global’s customer relationships with Interactive’s systems. “I wanted to put together all their messy broker business under Interactive technology,” Peterffy, an engineer by training, told Fortune. “We’d integrate it all and simplify it all, and it would become a terrific business.” In June 2011, Peterffy had even met secretly with Corzine in a room at the St. Regis Hotel during an investor conference, to spell out his vision. According to Peterffy, Corzine listened, but then nothing happened…A sale was the only way to salvage anything. Over the weekend, the list of prospective buyers—which initially included JP Morgan and the Jefferies Group—shrank to just one: Interactive Brokers. After years of unrequited pursuit, Thomas Peterffy might finally own MF Global…The deal would work like this: MF Global’s holding company would file for Chapter 11 reorganization. Peterffy would provide debtor-in possession financing, take over all the customer accounts, guarantee full payment, and be the presumptive acquirer in the final reorganization, for $1 billion. This would give Corzine time to sell everything else, including the rest of the RTMs, without taking a bath. MF Global’s shareholders might even get something.

So, from the Fortune report, it’s clear that Mr. Peterffy was going to go through with the MF Global deal, and an SEC division chief emailed to ask questions about it, including Thomas Peterffy plan for an $800 million cash infusion to MF Global. But what’s not clear from this point is if the SEC would have signed off on the deal, or put the block on it. But from the accounts of what the NY Post has reported, the ultimate outcome would have been a claim of what Fortune confirms: insider trading.

So, there’s the picture, the real picture, of the man pushing his face at you, telling you to vote Republican. Basically so he can keep doing shady deals that benefit no one other than himself.

Greed is good.