Thursday, November 01, 2012

House Panel to Release MF Global Report with Recommendations for Regulatory Change

The House Financial Services Subcommittee on Oversight and Investigations, chaired by Rep. Randy Neugebauer (R-TX), is expected to report the results of its year-long investigation into the collapse of MF Global in the next few weeks. According to Chairman Neugebauer, the investigation is essentially an autopsy of how MF Global came to its ultimate demise and what policy changes need to be made to prevent similar customer losses in the future. He emphasized the need to restore confidence and integrity to the futures markets and send a strong signal to customers that their accounts are safe and secure.

Since MF Global filed for bankruptcy on Oct. 31, 2011, the Subcommittee has led the congressional investigation into the firm’s collapse and the whereabouts of money that went missing from customer accounts. The Subcommittee’s investigation has involved three hearings, more than 50 interviews, and the review of over 243,000 documents obtained from MF Global, its former employees, federal regulators and other sources.  MF Global customers deserve to know how and why their funds went missing, said the Chair, and  market participants deserve to know whether regulatory lapses have been identified and corrected.

In testimony before the Committee, Robert Cook, Director of the SEC’s Division of Trading and Markets said that MF Global Holdings Ltd., together with its subsidiaries, was a publicly traded holding company that conducted financial activities through a number of subsidiaries located in various countries. MF Global Inc. an indirect subsidiary of the holding company, was dually registered with the CFTC as a futures commission merchant and with the SEC as a broker-dealer.

He noted that the bankruptcy of MF Global has resulted in serious hardship for many of its customers, who have experienced significant delays and uncertainty with respect to their ability to access their own assets. More broadly, the firm's collapse and the apparent shortfall in customer assets highlight the need for financial firms and regulators to remain vigilant in ensuring that customer assets are appropriately protected and made readily available to customers whenever they may be needed.


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