MF Global executive details scramble for funds

Wed Mar 28, 2012 8:36am EDT
 
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By Sarah N. Lynch

WASHINGTON (Reuters) - MF Global's MFGLQ.PK North America chief financial officer plans to tell lawmakers on Wednesday that she desperately sought fund transfers to cover the customer account shortfall in the final hours before the firm's collapse, but that some banks would not execute them.

In prepared testimony, Christine Serwinski also said she was convinced at first that the roughly $1 billion deficit in customer funds had to be an accounting error and only learned on the morning of the bankruptcy that the shortfall was real.

"We worked relentlessly throughout the early morning hours and, indeed, throughout the day on October 31, to try to bring the segregated and secured accounts back to the appropriate levels," she said in her first public remarks about the events surrounding MF Global Holdings Ltd's collapse and the ongoing search for missing customer money.

"Although we were able to move some funds into the (futures brokerage's) segregated and secured accounts, a number of submitted transfers were not executed by the banks, and we were unable to move sufficient funds to make up for the shortfall."

The House Financial Services panel hearing on Wednesday will for the first time give lawmakers an opportunity to question a crucial second tier of MF Global executives, the people who had operational control over money transfers at the brokerage.

Top executives, including former chief executive Jon Corzine, have already testified and denied knowledge of any improper transfers.

Serwinski is due to appear alongside General Counsel Laurie Ferber, Chief Financial Officer Henri Steenkamp and Assistant Treasurer Edith O'Brien.

Diane Genova, deputy general counsel for JPMorgan Chase & Co (JPM.N: Quote), is due to testify on a second panel.   Continued...

 
The sign marking the MF Global Holdings Ltd. offices at 52nd Street in midtown Manhattan is seen in New York November 2, 2011. REUTERS/Shannon Stapleton