November 16, 2011 / 5:20 PM / 8 years ago

SEC still checking MF Global securities assurances

WASHINGTON (Reuters) - U.S. securities regulators are not ready to accept MF Global’s MFGLQ.PK assertion that the customer funds in securities accounts are all properly protected and accounted for, a top official said on Wednesday.

Robert Cook, director of the Securities and Exchange Commission’s Trading and Markets Division, told lawmakers that regulators are still struggling to verify information from the failed brokerage, which declared bankruptcy on October 31 following risky bets on European sovereign debt.

The Commodity Futures Trading Commission, meanwhile, is the regulator with oversight of the futures accounts where about $600 million of customer money was reported missing.

“What the firm self-reported was a shortfall on the futures side,” said Cook, who added that the firm had said it was in compliance with customer segregation rules for securities accounts, which the SEC regulates.

“As you can imagine, we are not taking that at face value,” Cook told the Senate Banking Committee.

MF Global had been close to striking a deal with Interactive Brokers to sell its futures business, but the shortfall in customer funds caused the talks to collapse.

Cook told lawmakers that absent the missing funds, “there would have been a significant chance” of a deal going through.

Now, the CFTC, the SEC and the U.S. Department of Justice are investigating whether the money missing from customer accounts may have been improperly mixed with the firm’s funds.

SEC enforcement director Robert Khuzami, who was also on hand to testify to the committee, declined to comment to Reuters on MF Global.

Reporting by Sarah N. Lynch; Editing by Tim Dobbyn

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