Today, the House Agriculture Committee held a public hearing to examine the MF Global bankruptcy and reports that as much as $1.2 billion in customer funds have gone missing. The disappearance of customer funds from MF Global has badly shaken the trust that farmers, ranchers, and businesses across America place in futures trading.
Farmers and ranchers rely on futures markets to smooth price volatility and manage the risks that are inherent to production agriculture. Businesses have confidence in futures investments because of a protection that ensures that customer funds used to guarantee trades must be segregated from the broker's funds. This separation of funds protects customers' margin in the event that their trader defaults or files for bankruptcy.
The hearing marked the first public comments about the circumstances surrounding the bankruptcy from MF Global's former CEO, Jon Corzine.
Members questioned Corzine and other witnesses about the events leading up to the bankruptcy and the whereabouts of customer funds.
"Today's hearing was an effort to get answers for the constituents impacted by MF Global's collapse. Former MF Global CEO Jon Corzine's presence was critical to our objective, and unsurprisingly, we are finding that there are still more questions than answers about the missing customer funds. There is a great deal more to learn if we are to restore confidence in the futures markets. Ultimately, our primary focus is ensuring MF Global's customers have their money restored. This hearing was the first step in that process, but it will not be the last," said Chairman Frank Lucas.
"The Agriculture Committee's oversight of the futures and derivatives markets is a responsibility that I do not take lightly. Wall Street, apparently not content to sully its own reputation, has now stained our well-run futures markets by apparently violating the supreme law - protection of customer funds. At the Agriculture Committee we are focused on the facts. It is the facts that will tell us what happened, who knew about it, and consequently, who was responsible. Only by uncovering the facts, can we prepare ourselves for policy responses that are necessary to address what has happened," said Ranking Member Collin Peterson.