WASHINGTON, Nov. 16 - U.S. Senator Pat Roberts (R-Kan.) called on the Commodities and Futures Trading Commission (CFTC), the exchanges, and the bankruptcy trustee to work together to release frozen MF Global margin account funds to customers as soon as possible.
More than two weeks after MF Global filed for Chapter 11 bankruptcy, over 30,000 customers are still stuck without access to their margin account funds.
“While I can appreciate the need to get to the bottom of the situation at MF Global, many farmers, bankers and agribusinesses in Kansas, and around the country, have been left in limbo,” Roberts said. “Failure to release these accounts will penalize the innocent victims of this collapse with further financial hardship."
On Thursday, a bankruptcy judge is expected to consider a request by James Giddens, the trustee supervising the liquidation of the MF Global Inc broker-dealer unit, to release $520 million to customers who held only cash in their commodities accounts.
Senator Roberts, ranking member of the Senate Committee on Agriculture, Nutrition and Forestry which has jurisdiction over the CFTC, sent the following letter this week to Jill Sommers, the senior commissioner of the CFTC on issues pertaining to MF Global:
“I write on behalf of the large numbers of Kansas producers, grain elevators, cattle feeding operations and commodity risk management firms who, through no fault of their own, are experiencing severe financial losses and hardship due to the MF Global, Inc. bankruptcy. The shortfall of segregated funds in thousands of MF Global, Inc. customers' margin accounts is a shocking development that is unprecedented in the decades' long history of agricultural futures markets.
“I am pleased to know that you are the senior Commissioner for the Commodity Futures Trading Commission (CFTC) in matters relating to the bankruptcy of MF Global, Inc. I am eager to discuss what might be done to prevent a firm from seemingly violating one of the bedrock principles of futures markets. However, the more pressing matter is to focus on what can be done by the CFTC, the exchanges and the bankruptcy trustee to facilitate the release of these frozen margin account funds to former MF Global, Inc. customers, many of them Kansans, as soon as possible.
“While it is encouraging that all futures positions from MF Global, Inc. customer accounts have been liquidated or transferred to other futures commission merchants, along with the minimum requirement of margin funds, there is still a considerable shortfall in these margin accounts belonging to thousands of MF Global, Inc. customers. The CFTC sent a letter to the trustee on November 1 encouraging him to use his best efforts to transfer these customer accounts. Unfortunately, and despite efforts by the exchanges, it is my understanding that nearly all of these accounts have yet to be made whole.
“While I appreciate your agency's efforts to deal with this crisis, I cannot emphasize enough that the CFTC must do all that it can, in coordination with the bankruptcy trustee, to assist these Kansas farmers, bankers and agribusinesses. The failure to release these accounts in short order may well introduce a systemic risk of financial hardship to these small firms where it did not exist before and who were innocent bystanders in the financial downfall of MF Global, Inc.
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