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Reply #78: MF Global customers taking case to Washington [View All]

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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Nov-28-11 03:10 PM
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78. MF Global customers taking case to Washington

MF Global Holdings Ltd. customers are preparing to bring their grievances over the firm's failure to Washington. "There wasn't anybody who was advocating for customers," said John Roe, a principal with BTR Trading Group, who has started a group called the Commodity Customer Coalition. The group, which represents customers who hold more than 7,000 MF Global accounts, is revving up a lobbying effort as Congress prepares to grill regulators on the MF Global bankruptcy and a shortfall of customer funds that could total $1.2 billion, twice what was originally thought. It also could turn to the courts as part of its effort to get customer funds back.

Roe, who trades for clients and on his own account, said he has over $10 million of his own money and his clients' money still stuck in MF Global. One complaint Roe has is with how the Commodity Futures Trading Commission is handling the fund recovery process. He said the agency shouldn't have turned to the Securities Investor Protection Corporation trustee because SIPC is designed to protect securities customers...SIPC provides insurance to securities customers in the event of a broker-dealer failure where there is a shortfall in customer funds, but there is no equivalent for the futures industry. Donald Horwitz, an attorney with compliance and regulatory consultancy Oyster Consulting LLC, said maybe the futures industry needs a similar entity...Horwitz said that the futures industry has argued against insurance because futures firms have always properly managed customer money. But in light of MF Global, he says that now seems to be a false premise. An insurance fund is certainly part of the discussion about what should be done in the wake of MF Global, said Dan Driscoll, chief operating officer of the National Futures Association, a self-regulatory body for the industry. "One of the arguments against having an insurance program is that just to administer it costs money and ultimately those costs get passed on to customers," Driscoll said...

CFTC Chairman Gary Gensler and SEC Chairman Mary Schapiro are scheduled to testify before the Senate Agriculture Committee on Dec. 1. A House Financial Services subcommittee will hold another hearing on MF Global, to which they have invited regulators as well as former MF Global chief executive Jon Corzine, on Dec. 15...Roe said he is appealing to lawmakers to add his group to the list of speakers for the Dec. 15 hearing.
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