Highlights: House panel's hearing on MF Global bankruptcy

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Posted: Dec 08, 2011 1:54 PM
Highlights: House panel's hearing on MF Global bankruptcy

WASHINGTON (Reuters) - The following comments were made on Thursday at a House Agriculture Committee hearing to examine the bankruptcy of MF Global. It was the first hearing to bring the major players together since the firm's collapse.

The star witness was Jon Corzine, former chief executive of the MF Global Inc. Others testifying include Jill Sommers, a Republican member of the Commodity Futures Trading Commission and James Koback, the lead counsel for the Trustee for the Liquidation of MF Global Inc.

Here are highlights from comments made at the hearing from Corzine, other witnesses and lawmakers:

CORZINE ON HIS ACTIONS LEADING UP TO MF GLOBAL'S DEMISE:

"I never intended to break any rules, whether it dealt with the segregation rules or any of the other rules that are applicable."

"I am not in a position, given the number of transactions, to know anything specifically about the movement of any specific funds and I will repeat, I certainly would never intend to direct or have segregated funds moved."

"There were many transactions that occurred in those last chaotic days."

"It would be very hard for me to speculate why or where that short fall took place."

CORZINE ON WHAT LED TO HIS FIRM'S DEMISE AND ITS IMPACT:

"One of the recurrent themes in the media has been that MF Global took on too much risk during my tenure, in particular the amount of leverage that MF Global bore at the time of its bankruptcy. In fact, MF Global reduced leverage."

"As the chief executive officer of MF Global, I ultimately had overall responsibility for the firm. I did not, however, generally involve myself in the mechanics of the clearing and settlement of trades, or in the movement of cash and collateral."

"At the time that MF Global entered into the transactions, I believed that its investments in short-term European debt securities were prudent."

CORZINE ON POSSIBLE THREATS TO THE BOARD:

"I did not threaten the board that I would leave. I had one specific conversation with the lead director, which could have been interpreted that way. If the board used the powers it held, had lost confidence in me, I would be willing to step down."

CORZINE ON LOST FUNDS AND REPAYING CUSTOMERS:

"Moreover, there were an extraordinary number of transactions during MF Global's last few days, and I do not know, for example, whether there were operational errors at MF Global or elsewhere, or whether banks and counterparties have held onto funds that should rightfully have been returned to MF Global."

TERRENCE DUFFY, EXECUTIVE CHAIRMAN CME GROUP, INC. ON LOST

FUNDS:

"While it is clear that action is necessary to restore customer confidence and protect against future failures, the fact is that MFG broke rules by moving customer segregated funds out of an account over which it had control."

"Our audit and spot check of MFG were performed at the highest professional level; the transfer of segregated funds out of the appropriate accounts was disguised from all regulators."

"While it is clear that action is necessary to restore customer confidence and protect against future failures, the fact is that MFG broke rules by moving customer segregated funds out of an account over which it had control."

JAMES KOBAK ON CUSTOMER RECORDS:

"Most of the mess we see is really from the last week or two and again, I am not an accountant, we have Deloitte and others working for us, I think frankly the customer ... records for individual customers were in fairly good shape up until the end."

CHAIRMAN FRANK LUCAS, HOUSE AGRICULTURE COMMITTEE:

"Unfortunately, the very cornerstone of the futures markets, customer funds segregation, has been severely and suddenly called into question."

REP. COLLIN PETERSON, RANKING DEMOCRAT ON THE HOUSE PANEL:

"Unfortunately, some of my friends on the other side of the Capitol seem hell-bent and ready to assign blame for MF Global to the CFTC for what they perceive as failing to do their jobs. Do we blame the police officer the day after our house gets broken into? Of course not."