Regulators Testify in Hearing on MF Global Bankruptcy
A number of federal regulators appeared before a Senate Committee Thursday to answer questions about how they allowed failed derivatives broker MF Global to make massive risky bets and why hundreds of millions of dollars came up missing from its customers' accounts. The hearing,, which was held by the Senate Agriculture Committee, is the first major congressional hearing in the case since MF Global declared bankruptcy on October 31st.
Among those called to testify are Gary Gensler, the chairman of the Commodity Futures Trading Commission, and Mary Schapiro, chairman of the Securities and Exchange Commission. While Gensler will be able to answer some questions about the CFTC's probe of MF Global, he was likely in the dark about some aspects of the investigation as he recused himself from the investigation earlier this month. Jill Sommers, a Republican commissioner who took over the probe, was also called to testify.
MF Global filed bankruptcy in October after being forced to disclose that it had lost $6.3 billion in a bet on European sovereign debt. Efforts to find a buyer for the firm failed, largely due to the discovery that hundreds of millions of dollars of customer funds were missing. Since the filing, investigators have been analyzing the firm's books, which have been described as messy and unorganized, searching for the missing money that has been estimated to be as much as $1.2 billion by the trustee hired to liquidate the firm's assets.
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