* CFTC, SEC regulators to face lawmakers on MF Global
* Sommers to answer questions after Gensler recusal
* Grassley: public "still in the dark on basic facts"
By Christopher Doering and Sarah N. Lynch
WASHINGTON, Dec 1 U.S. senators plan to press
regulators on Thursday on whether they were asleep at the switch
as now-bankrupt MF Global took on massive risky bets,
and why hundreds millions of dollars in customer funds are still
Commodity Futures Trading Commission Chairman Gary Gensler is
one of the regulators called to testify before the Senate
Agriculture Committee, in the first major congressional hearing
about MF Global since it filed for bankruptcy on Oct. 31.
While Gensler will be able to answer some questions about the
CFTC's MF Global probe, many inquiries are expected to be directed
toward Jill Sommers, a Republican commissioner, who is overseeing
the agency's investigation after Gensler recused himself in early
Mary Schapiro, chairman of the Securities and Exchange
Commission, also is expected to testify.
"The public is still in the dark on basic facts," said Senator
Chuck Grassley, a Republican on the committee. "I hope the
committee will be able to get some direct answers from Chairman
Gensler and Chairman Schapiro," he said.
MF Global collapsed in late October after the firm was forced
to reveal that it had made a $6.3 billion bet on European
An effort to sell the firm failed, partially due to the
revelation that hundreds of millions of dollars in customer money
were not where they should have been.
Investigators have been scouring the company's books,
described as messy and unorganized, for the fund shortfall that
has been estimated as much as $1.2 billion by the liquidating
However, regulators have been at odds with the trustee,
believing that figure is too high.
Regulators and law enforcement officials are trying to
determine what happened to the money and whether MF Global may
have improperly mixed customer funds with its own -- a major
violation of industry rules.
The SEC is also conducting a broad review into how the firm
The hearing on Thursday is the first in a series on MF Global,
with the firm's former chief, Jon Corzine, called to testify at
Senate and House hearings scheduled for later this month.
Originally this hearing was supposed to examine how each
agency is doing in implementing last year's Dodd-Frank Wall Street
"I have critical questions about Dodd-Frank implementation
which is what the hearing is about," Senator Pat Roberts, the
panel's ranking Republican, told Reuters. "However, given the
extraordinary situation with MF Global, I plan to ask Chairman
Gensler about his recusal and his oversight leading up to the
Gensler said in early November that he was not participating
in the investigation of MF Global so he would not become a
distraction or risk creating an appearance of a conflict of
Gensler and Jon Corzine, who resigned as MF Global's chief
executive last week, worked at Goldman Sachs Group Inc at
the same time and held prominent positions. They both left the
investment bank in the late 1990s.
MF Global had nearly a half dozen regulators, including the
CFTC, the SEC, the Chicago Mercantile Exchange , the
Chicago Board Options Exchange, and the Financial Industry
Regulatory Authority, policing various parts of the firm. However,
there was no one clear watchdog responsible for the whole