3 Min Read
(Reuters) - Former customers of MF Global MFGLQ.PK, waiting for the return of as much as $1.6 billion missing from their accounts, will get their first chance next week to hear testimony from Louis Freeh, the embattled trustee for the bankrupt commodities firm.
Freeh, who has come under fire for the way he has managed the assets of MF Global's bankrupt parent company, will testify on April 24 before the Senate Banking Committee, according to an announcement from the committee on Tuesday.
Freeh, a former FBI director, will join James Giddens, the trustee in charge of MF's broker-dealer unit, and a handful of regulators as witnesses.
The hearing will address policy implications of MF Global's now-infamous implosion, which saw the Jon Corzine-led brokerage enter bankruptcy with a significant shortfall in the accounts of its commodity trader customers.
Unlike Giddens, who testified before the Senate Agriculture Committee in December, the hearing will be the first appearance before a Congressional panel for Freeh, the man tasked with recouping money for MF Global's creditors.
Customers and lawmakers alike have criticized Freeh at times, most notably amid reports he would consider seeking court permission to pay bonuses to some MF Global executives.
Critics felt it was improper to reward executives who may have helped orchestrate MF Global's downfall. Freeh has yet to take any steps with respect to seeking bonuses.
His spokeswoman did not have an immediate comment on Tuesday.
MF Global collapsed in October after revealing exposure to risky European debt.
Giddens in a February report said MF Global workers improperly used client money to cover corporate transactions as the company sank, creating a massive shortfall in client accounts. Giddens has estimated the shortfall at $1.6 billion, while futures exchange CME Group Inc (CME.O) has ballparked it at between $500 million and $600 million.
CME Executive Chairman Terrence Duffy is also scheduled to testify at the banking committee hearing.
MF Global's bankruptcy has included some tension between Freeh and Giddens. While Freeh is responsible for recovering money for MF Global's affiliates and creditors, Giddens' job is to recoup for customers money that may have been improperly taken from their accounts.
The trustees could end up as rivals if disagreements emerge as to whether certain assets belong to MF Global customers or to its affiliates and creditors. Already, disagreements have arisen on the subjects of information-sharing and transparency related to Giddens' recovery efforts.
Also slated to testify at the banking committee hearing are Commodity Futures Trading Commissioner Jill Sommers; Robert Cook, director of the Securities & Exchange Commission's Division of Trading and Markets; and Financial Industry Regulatory Authority President Richard Ketchum.
Editing by Robert Birsel