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Tags: CME | Probe | MF | Global

NY Times: CME Faces Regulatory Probe on MF Global

Friday, 06 January 2012 10:29 AM EST

CME Group Inc. is under investigation for its handling of MF Global before the broker's collapse last October, The New York Times said.

The probe by the Commodity Futures Trading Commission, reportedly focuses on whether CME did enough to safeguard client assets at the giant futures broker. Regulators are still seeking hundreds of millions of dollars of customer funds gone missing since MF Global's failure.

A spokeswoman for CME Group, the biggest operator of U.S. futures exchanges and MF Global's first-line regulator, said the company welcomed any probe.

"We haven't been notified that they are investigating us, but we would expect and frankly welcome it — it's part of their job that they are looking at the things we did," CME spokeswoman Anita Liskey said. "We are confident that they will agree that we did our job to the best of our abilities."

CME executive chairman Terrence Duffy has testified that MF Global provided false documentation to the CME about the customer funds under its control, saying it had a surplus and later correcting them to show a deficit.

Separately, the Wall Street Journal reported MF Global's bankruptcy trustee, Louis Freeh, has refused to turn over some documents to the CFTC, which is investigating what happened to an estimated $1.2 billion in missing customer funds.

Freeh, a former director of the Federal Bureau of Investigation and who represents MF Global's parent company, has asserted attorney-client privilege in deciding not to release certain documents to the CFTC, according to his office and people familiar with the matter, the Journal said.

The dispute is complicating efforts to learn how the firm lost the customer funds and to return the money to its owners and could slow the investigation, the Journal said, citing people familiar with the investigation.

A spokesman for Freeh's office told Reuters that the trustee's team was cooperating with regulators, law enforcement and Congressional committees and is not aware "that our initial desire to preserve the attorney-client privilege has hampered their respective investigations.

"To the extent that the authorities express concerns to us that the effort to preserve the attorney-client privilege is hampering their investigations, we of course would be willing to discuss the issue with them and be inclined to waive privilege," the spokesman said.

A spokesman for the CFTC declined to comment to the Journal on the story.

A CFTC spokesman did not immediately respond to a request from Reuters for comment.

© 2024 Thomson/Reuters. All rights reserved.

Friday, 06 January 2012 10:29 AM
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