What is in this article?:
- Ag committee begins hearings on MF Global meltdown
- Exclusive right to funds
Witnesses from the Commodity Futures Trading Commission (CFTC) and the law firm working with the bankruptcy trustee also testified before the Committee Thursday, shedding some light on the situation as investigators currently understand it.
Exclusive right to funds
When questioned about the priority customers will have in getting back their money, as compared with other debt holders, Kobak said customers have an “exclusive right” to their funds and that the trustee would pursue other sources of funds if they are available legally.
Both Kobak and CFTC Commissioner Jill Sommers emphasized how complicated MF Global’s trades and records were, noting that the investigation is not yet able to draw many definitive conclusions.
Earlier in the week, the CFTC approved a new rule about how commodity firms can use customer funds, which has been generally praised though its full impact is not yet clear.
MF Global, a derivatives broker-dealer, declared bankruptcy on Oct. 31. Since that time, federal and international investigators have been working through the company’s records to determine what precipitated its failure and to locate the missing customer money.
The bankruptcy and lost money has touched farmers, grain handlers and others throughout the country, with nearly every Member on the House Ag panel saying he or she had heard from affected constituents.
In addition to the customer losses, which may or may not ever be recovered, the bankruptcy has threatened systemic confidence in the futures market, which is the key tool for agricultural interests seeking to manage their risk.
The Senate Agriculture Committee announced this week a witness list for its MF Global oversight hearing, scheduled for Tuesday, Dec. 13. That panel unanimously voted to subpoena Corzine to appear at the session alongside other executives of the company, regulators and MF Global customers.
The House Financial Services Subcommittee on Oversight and Investigations has also subpoenaed Corzine, for a Dec. 15 hearing. NAWG and other farmer and ag finance organizations recently wrote Congressional agriculture leaders urging careful oversight of the situation. Those letters are available at www.wheatworld.org/othercorrespondence.