Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Thursday, November 15, 2012

Staff Report on MF Global Failure Reopens Debate on SEC-CFTC Merger

The staff report prepared for the House Subcommittee on Oversight & Investigations, Committee on Financial Services, investigating the collapse of MF Global was released today. (Download MFGlobalStaffReport111512[1]) The report finds that Jon Corzine caused MF Global's bankruptcy and put customer funds at risk through his excessively risky business model and lack of systems and controls.  The report recommends that Congress consider enacting legislation that imposes civil liability on officers and directors who sign a FCM's financial statements or authorize specific transfers from customers' segregated accounts for regulatory shortfalls.

In addition, the report reopens the perennial debate over whether the SEC and CFTC should be merged.  It finds that "The SEC and the CFTC Failed to Share Critical Information about MF Global
with One Another, Leaving Each Regulator with an Incomplete Understanding."  It recommends:

The apparent inability of these agencies to coordinate their regulatory oversight efforts or to share vital information with one another, coupled with the reality that futures products, markets and market participants have converged, compel the Subcommittee to recommend that Congress explore whether customers and investors would be better served if the SEC and the CFTC streamline their operations or merge into a single financial regulatory agency that would have oversight of capital markets as a whole.

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