Sommers: ‘Significant' progress being made in MF Global case

By Sara Wyant

© Copyright Agri-Pulse Communications, Inc.

WASHINGTON, February 1, 2012 -Although the Commodity Futures Trading Commission (CFTC) has made “significant” progress in its enforcement investigation of bankrupt MF Global, a number of unanswered questions still remain, Commissioner Jill Sommers told attendees at the Wheat Industry Winter Conference last week in Washington.

Sommers, the senior commissioner overseeing MF Global matters, said the agency has a lot of work ahead of it to get customer funds back where they need to be, to determine what went wrong, and to determine whether to prosecute any violations of the Commodity Exchange Act.

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While $4.1 billion has been returned to customers, the CFTC estimates the amount of missing funds range between $600 million and $1.2 billion.

Sommers endorsed calls for the formation of a task force comprised of industry experts and stakeholders to work with the futures market regulator as it moves forward with initiatives to enhance the protection of customer funds. She refrained from commenting on specifics of the agency's investigation, but assured wheat industry participants that “we are working as expeditiously as possible.”

That's apparently not fast enough for one of her fellow commissioners.

“Instead of taking action to comprehensively identify and address vulnerabilities in futures customer protection, the commission continues its all-consuming fixation on swaps regulation,” the CFTC's Scott O'Malia complained in a speech at New York Law School on Tuesday, three months to the day after MF Global declared bankruptcy. The commission, O'Malia continued, has concentrated on swaps rulemaking, while “averting its gaze from the futures markets and their developments.

“Every dollar of this (missing) amount belongs to a futures customer - from a rancher in Montana to a farmer in Kansas,” he said.

In the meantime, CFTC Chairman Gary Gensler, who has recused himself from enforcement matters in the case, has directed commission staff to develop recommendations for policy and regulatory changes that may be necessary in the aftermath of MF Global.

Kansas Sen. Pat Roberts, the top Republican on the Senate Agriculture Committee, which has jurisdiction over the CFTC, blasted Gensler's move, coming after the chairman's recusal.

“I find it odd and confusing that Chairman Gensler can partially recuse himself, or ‘non participate' in matters regarding enforcement on MF Global, but he can direct the commission staff to make recommendations on the matter. It appears the chairman is trying to recuse himself solely from questioning before the Senate.” Most concerning, said Roberts, is that Gensler asked for the recommendations prior to completion of the CFTC's investigation and without stakeholder input.

“My constituents and victims of this bankruptcy who are missing thousands of dollars of their own funds ask me, ‘Just what is going on down there?'”



Original story printed in February 1, 2012 Agri-Pulse Newsletter.

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