CFTC chairman, Gary Gensler, stated that regulators are taking all the necessary actions to get to the bottom of the shortfall of over $600 million in customer money at the securities firm MF Global Holdings Ltd. He also stated that the regulators will also "find out to the fullest extent possible the full accounting of these moneys."
Another sign of the ongoing investigation of NY securities downfall, the trustee overseeing the liquidation of MF Global seeking court approval to subpoena both current and former officers, along with both current and former directors, employees, and affiliates. The trustee is in charge of investigating the company along with employees for fraud, misconduct, and mismanagement.
PriceWaterhouse Coopers, which has been their outside auditor since 2007, gave MF Global a clean audit opinion, stating that the company's financial statements "present fairly, in all material respects." Along with this PwC also stated that MF Global's internal controls were effective and appeared to have no material weaknesses. Any fraud that occurred after the year-end audit, wouldn't necessarily be detected by the auditors.
Mr. Gensler said that segregation of customer moneys should be maintained at all times. Mr. Gensler defended the oversight agency, citing an action that resulted in a $10 million settlement.
MF Global failed to supervised risk on 4 different occasions between 2003-2008, as a result they agreed to submit an independent review of both risk management and compliance programs. At that time, they enacted procedures for risk monitoring, compliance, training, and audit procedures.
Since MF Global filed for bankruptcy it will be hard to discover the assets of thousands of business and investors, with 10 firms, who had ties to MF Global. These firms will receive a majority of the transfers and be able to distribute some back to clients. The transfers are the first step requested by the customers to receive over $5 billion assets owed to them by MF Global, with hopefully more steps to follow to help the customers get back what they lost.
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