MF Global unloaded hundreds of millions of dollars' worth of securities to Goldman Sachs in the days leading up to its collapse, according to two former MF Global employees with direct knowledge of the transactions. But it did not immediately receive payment from its clearing firm and lender, JPMorgan Chase & Co, one of the sources said.

The sale of securities to Goldman occurred on Oct. 27, just days before MF Global Holdings Ltd filed for bankruptcy on Oct. 31, the ex-employees said. One of the employees said the transactions were cleared with JPMorgan Chase.

At the same time MF Global, which was run by former Goldman Sachs head Jon Corzine, was selling securities to Goldman to raise badly needed cash, the futures firm was also drawing down a $1.2 billion revolving line of credit it had with JPMorgan, according to one of the former MF Global employees.

The hastily crafted transactions and the seeming inability of MF Global to recoup some of the money in the sale to Goldman may start to explain why so much money remains unaccounted for at the futures firm.

It is unclear what type of assets Goldman bought from MF Global, but the securities were worth hundreds of millions of dollars, the former employees said. Corzine headed Goldman Sachs from 1994 to 1999.

Meanwhile, lawsuits are stacking up against Corzine who is the defendant in at least nine lawsuits before a federal judge in Manhattan, according to Bloomberg. The lawsuits seek compensation for losses from the company’s bankruptcy. Plaintiffs include funds and retirement systems.

Source: Reuters, Bloomberg