Regulators dig in at MF Global in money pursuit

Thu Nov 3, 2011 3:10pm EDT
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By Sarah N. Lynch and Christopher Doering

WASHINGTON (Reuters) - U.S. regulators are launching a broad review into the business practices of failed futures brokerage MF Global Holdings Ltd as their hunt continues for over $600 million in missing customer money.

Round-the-clock shifts for examiners have become the norm as they sort through the collapse of the firm headed by former New Jersey Governor Jon Corzine. MF Global filed for bankruptcy on Monday after risky bets on European debt scared away clients and investors.

"We will look at every aspect of how the firm conducted business," Mary Schapiro, chairman of the U.S. Securities and Exchange Commission, told Reuters regarding the agency's review. She declined to discuss any potential action that the SEC's enforcement division may take.

Investor fears over European sovereign debt risks facing other investment houses hit shares of Jefferies Group Inc hard early on Thursday until it issued a statement saying it had no meaningful net exposure.

In other developments, the president of a congressionally chartered investor protection group said there were some problems finding firms to take over some former MF Global customer accounts because of questions about missing money.

Both SEC's Schapiro and Gary Gensler, chairman of the Commodity Futures Trading Commission, painted a picture on Thursday of close teamwork between regulators to get to the bottom of why the firm collapsed and track down the funds.

Gensler said CFTC staff has been on-site at the firm since last Thursday, and took part in calls in the middle of the night with other regulators about the fate of the firm.

"The first time that we actually knew there was a shortfall for me was when I got woken up 2:30 a.m. Monday," Gensler told reporters after testifying to the Senate's Permanent Subcommittee on Investigations on Thursday.   Continued...

<p>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</p>