U.S. Senator Debbie Stabenow, Chairwoman of the Senate Committee on Agriculture, Nutrition and Forestry, Senator Pat Roberts, the Committee's Ranking Member, and all members of the Committee today urged Louis Freeh, the trustee overseeing the bankruptcy of MF Global Holding Ltd, not to award bonuses to top executives, "who should be held accountable for the failure of their company."
MF Global's bankruptcy last year, the eighth largest in U.S. history, resulted in an estimated $1.6 billion in missing customer funds. Thousands of farmers, ranchers and small business owners are still owed tens or hundreds of thousands of dollars. Executives of the now-collapsed firm testified before the Senate Agriculture Committee in December and indicated that they didn't know where the money went.
"It is difficult to understand why you would even consider paying anyone a bonus while nearly $1.6 billion in customer money is still missing," the Senators wrote in a letter to Freeh. "And it is absolutely outrageous to propose paying bonuses to the very people who were responsible for the firm's operational, legal, and financial management at the time customer money disappeared the failure of leadership in this case is truly unprecedented."
The full text of the letter is below.
March 15, 2012
The Honorable Louis Freeh
Chapter 11 Trustee, MF Global Holdings, Ltd,
c/o Freeh Group International Solutions, LLC
1185 Avenue of the Americas, 30th Floor
New York, NY 10036
Dear Judge Freeh:
We are deeply troubled by media reports that you are considering seeking permission of the court to pay enormous bonuses to top executives of the now-bankrupt MF Global Holdings. It is difficult to understand why you would even consider paying anyone a bonus while nearly $1.6 billion in customer money is still missing. And it is absolutely outrageous to propose paying bonuses to the very people who were responsible for the firm's operational, legal, and financial management at the time customer money disappeared.
A fundamental principle of commodities trading is that the firm's money must be accounted for separately and segregated from customer money. Throughout the long history of futures markets, no firm has ever lost customer money of this magnitude -- until MF Global. The failure of senior management in this case is truly unprecedented.
When one of these executives testified before our committee, under oath, he admitted that, knowing what he knows now, he could not certify that MF Global had appropriate financial controls in place.
Most egregiously , the proposed bonuses could not only reduce the amount of money available to repay MF Global customers, but the bonuses would be based on how much these executives have been able to recover for the firm's creditors, not the firm's customers. The executives who would receive these bonuses should be held accountable for the failure of their company, not rewarded for diverting even more money away from customers.
Thousands of MF Global customers still have not received their missing money. Giving bonus checks to the very people who lost that money is offensive on its face. We strongly urge you to reconsider your decision to seek bonus pay for MF Global executives.
Sen. Debbie Stabenow (D-MI), Chairwoman
Sen. Pat Roberts (R-KS), Ranking Member
Sen. Max Baucus (D-MT)
Sen. Michael Bennet (D-CO)
Sen. John Boozman (R-AR)
Sen. Sherrod Brown (D-OH)
Sen. Robert Casey, Jr. (D-PA)
Sen. Saxby Chambliss (R-GA)
Sen. Thad Cochran (R-MS)
Sen. Sen. Kent Conrad (D-ND)
Sen. Kirsten Gillibrand (D-NY)
Sen. Chuck Grassley (R-IA)
Sen. Tom Harkin (D-IA)
Sen. John Hoeven (R-ND)
Sen. Mike Johanns (R-NE)
Sen. Amy Klobuchar (D-MN)
Sen. Patrick Leahy (D-VT)
Sen. Richard Lugar (R-IN)
Sen. Mitch McConnell (R-KY)
Sen. Benjamin Nelson (D-NE)
Sen. John Thune (R-SD)