We are happy to report that one of the Representatives we contacted has taken action in the MF Global situation. We applaud Congressman Huelskamp for being both receptive and proactive.
We would encourage you all to contact your Representative’s office and urge them to address your concerns. To write, call and contact your State Senator, search here.
(WASHINGTON) – Kansas Congressman Tim Huelskamp issued the following statement regarding the more than $600 million missing in client funds held/managed by MF Global Holdings Ltd., a securities firm.
“Throughout the past two weeks I have heard from several Kansans who are on the receiving end of MF Global’s flagrant disregard for the law and mismanagement,” Congressman Huelskamp said. “The apparent comingling of funds has wreaked havoc for many customers. For the sake of those who have fallen victim to this financial wrongdoing, it is my hope that CFTC and the courts will not rest until the missing funds are restored to customers as soon as possible. And, It is my hope that they will not rest until all involved parties are prosecuted to the fullest extent of the law possible if and when violations are found.”
“I will continue to monitor the situation, put pressure on the judge and CFTC to investigate and move with all possible speed, and will support the ongoing investigations. I will work to keep my website updated with the latest information regarding MF Global, the bankruptcy court, and what it means for Kansans. I urge constituents: Do not hesitate to contact my office with any questions you may have.”
MF Global Holdings Ltd., run by former New Jersey Governor Jon Corzine, filed for bankruptcy (the eighth-largest in history) on October 31, 2011. Shortly thereafter it was discovered that hundreds of millions of dollars were missing. News reports indicate that the firm pursued bankruptcy following risky investments in the European bond market that led to major losses and downgrades. MF Global tried to avert bankruptcy by finding another firm to acquire it, but potential knowledge of the customer fund shortfall may have discouraged such acquisition.
Commodity customers’ monies were supposed to be kept in segregated accounts, but there is speculation from the CME Group that MF Global broke rules and did not keep such funds in a different account from its futures trading account. The Commodity Futures Trading Commission (CFTC) is now investigating along with the Securities and Exchange Commission (SEC) and the Federal Bureau of Investigation (FBI) the “disappearance” of these funds. Specifically, CFTC is investigating possible violations of the Commodity Exchange Act that prohibit mixing of such funds (see statement from Commissioner Scott D. O’Malia). This law also requires entities like MF Global to have enough money in its accounts to cover customer liabilities (see letter from Kansas City Board of Trade to members).
The missing $633 million represents approximately 12 percent of the segregated funds; the remaining 88 percent have been accounted for.
A trustee has been appointed to oversee and recommend to a bankruptcy judge how funds will be paid out to customers. It is expected that a bankruptcy judge will hear the request of the trustee charged with overseeing these accounts to release slightly more than $500 million of the more than $600 million missing funds.