Gyroscopic Investing

(Reuters) - Four months after U.S. futures broker MF Global collapsed, roughly $1.6 billion in customer money is still missing, trading volumes are down, and the futures industry is looking for ways to restore confidence.

The U.S. Commodity Futures Trading Commission is due to hold a roundtable in Washington DC on Wednesday and Thursday to discuss how to better protect customer funds. Here are some of the more notable regulatory fixes currently under discussion:

* Make MF Global customers whole: Arguing that the industry will stay flat on its back unless all MF Global customers get every cent of their money back, two new members of the National Futures Association board proposed a novel solution: assess a fee on NFA members, and use the proceeds to secure a loan to cover the shortfall. The NFA is a quasi-regulatory agency funded by the industry and responsible for registering all futures brokers and overseeing some of them. The proposal, first floated in the weeks after MF Global's October 31 bankruptcy, drew immediate criticism from insiders who said it would create "moral hazard." But the two board members stuck with it, and this month formally asked the NFA board to study the possibility. NFA's president and chairman both declined to discuss the proposal with Reuters, and it's unclear whether it will gain traction.

* Neutralize the "Corzine defense": Jon Corzine, the former Goldman Sachs banker who ran MF Global as its CEO until shortly after the bankruptcy, told lawmakers that he was unaware of any large transfers of customer money that could have resulted in the giant shortfall of funds. The NFA is considering a rule that would force the top executives of futures brokerages to sign off on or otherwise take "personal responsibility" for transfers of excess customer funds over a certain set amount, according to NFA's Dan Driscoll.

clacy wrote: The simple way to prevent this in the next 20 years would be to hang Corzine.  Frankly, I would not shed any tears.

MediumTex wrote: Weren't Sarbanes-Oxley and Dodd-Frank supposed to prevent this sort of thing?

The complaint filed yesterday by the Commodity Futures Trading Commission seeks to punish Corzine for failing to supervise employees at MF Global Holdings Ltd., which transferred client funds to pay debts in a failed effort to save the firm. Less than a year after the October 2011 bankruptcy, Corzine considered starting a hedge fund, the New York Times reported in August, citing people with knowledge of his plans.

If the CFTC prevails against Corzine, “he’ll face a very serious challenge if he ever wants to be involved in the money-management business again,”? said Gregory Bruch, a law partner at Bruch Hanna LLP in Washington and former assistant enforcement director at the Securities and Exchange Commission. “They’re trying to bar him from the business, and that’s going to be a huge fight.”?

Reub wrote: Corzine off the hook

Ad Orientem wrote: I can't believe I'm typing this. But for the first time ever, I think I miss Elliot Spitzer. If he were still NY Attorney General people would be going to jail, or more likely would already be there.

Libertarian666 wrote:

Ad Orientem wrote: I can't believe I'm typing this. But for the first time ever, I think I miss Elliot Spitzer. If he were still NY Attorney General people would be going to jail, or more likely would already be there.

Of course. Which is why he isn't still the Attorney General.

Ad Orientem wrote:

Libertarian666 wrote:

Ad Orientem wrote: I can't believe I'm typing this. But for the first time ever, I think I miss Elliot Spitzer. If he were still NY Attorney General people would be going to jail, or more likely would already be there.

Of course. Which is why he isn't still the Attorney General.

I think that has more to do with the fact that he was elected Governor of New York and promptly got caught in a very compromising position (both personally and legally).

Libertarian666 wrote:

Ad Orientem wrote:

Libertarian666 wrote: Of course. Which is why he isn't still the Attorney General.

I think that has more to do with the fact that he was elected Governor of New York and promptly got caught in a very compromising position (both personally and legally).

Oops, sorry, my mistake. What I meant was that the reason he was driven from office was due to his history of not letting Wall Street get away with EVERYTHING.

Or did you not notice that none of the other clients of that madam were exposed? I'm sure he wasn't the only public figure, just the only public figure that needed to be removed from office.

It's a racket. Those guys are all crooks.