By Sarah N. Lynch
WASHINGTON Jan 3 Mizuho Financial Group
agreed to pay $175,000 to settle civil charges by U.S.
futures regulators in connection with allegations that the bank
failed to hold enough funds in its secured accounts to protect
clients, the regulators said.
The Commodity Futures Trading Commission said Mizuho
Securities USA Inc did not immediately report the deficiency to
regulators and failed to properly supervise its employees.
The bank agreed to settle the matter without admitting nor
denying the allegations.
A spokesperson for Mizuho could not be immediately reached
for a comment.
The CFTC's rules require futures brokerages to keep enough
funds in separate secured accounts to help cover the obligations
of its customers.
The CFTC stepped up its enforcement of rules protecting
customer funds over the past year after an estimated $1.6
billion of customer funds went missing amid the collpse of MF
Global in 2011 under the weight of aggressive bets on sovereign
The alleged deficiencies of Mizuho's secured accounts
occurred in October 2011, just weeks before MF Global's
The CFTC said Mizuho had a $12.4 million shortfall of
secured funds on Oct. 7, 2011, and another shortfall of about
$41 million on Oct. 10.
Daily accounting reports did not properly reflect the
deficiencies, the CFTC said. After the bank discovered the
problem on Oct. 11, it did not notify the CFTC until the
The CFTC said Mizuho did not have "proper policies and
procedures" in place to ensure that funds were transferred to
the correct accounts.
"Mizuho also failed to provide its employees with
training regarding their obligation to immediately notify the
Commission of any secured fund deficiency," the CFTC added.