* Lawmaker looks to CFTC's Gensler for answers of MFG
* Regulators failed to effectively coordinate oversight
* Panel has Dec. 15 hearing with Gensler, MFG executives
By Christopher Doering
WASHINGTON, Nov 29 A House Republican lawmaker
is pressing Gary Gensler, the head of the Commodity Futures
Trading Commission, on whether early signs of MF Global's
collapse fell through the cracks.
Representative Randy Neugebauer, chair of the House
Financial Services subcommittee on oversight and
investigations, said in his letter to Gensler he was "concerned
about the effectiveness" of regulators and self regulatory
organizations that oversee MF Global .
"Different information was known by multiple SROs that
might have, if aggregated and shared, been used to identify the
risk at MF Global earlier or might have mitigated the
consequences of its collapse," Neugebauer said in a letter to
Gensler dated Nov. 28.
A CFTC official could not be reached for comment.
Gensler has been invited to appear before Neugebauer and
the subcommittee on Dec. 15 along with other regulators and Jon
Corzine, who resigned as MF Global's chief executive, and
Bradley Abelow, the firm's chief operating officer.
The failed brokerage had a half dozen regulators including
the CFTC, Securities and Exchange Commission, Chicago
Mercantile Exchange and the Financial Industry
Regulatory Authority policing various parts of the firm, but no
one clear watchdog responsible for the whole company.
MF Global filed for Chapter 11 protection on Oct. 31 after
the New York-based company revealed it had made a $6.3 billion
bet on European sovereign debt, spooking investors.
The shortfall of commodity customer funds at MF Global may
be around $1.2 billion according to the trustee liquidating the
company, though Reuters reported on Monday that regulators and
a law enforcement official believe the total is being
Regulators 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 apparent loss of segregated client funds at MF Global
is extremely troubling," said Neugebauer, who asked Gensler
whether there were concerns expressed about MF Global at
Financial Stability Oversight Council meetings this year.
Neugebauer also asked Gensler for more information on why
Gensler chose to recuse himself from the MF Global
Gensler and Corzine worked at Goldman Sachs Group Inc at the same time and held prominent positions. They both
left the investment bank in the late 1990s.
Gensler has said he was not participating in the
investigation so he would not become a distraction.