After MF Global, futures industry rethinks bailout fund

Reuters - In November 1986, shaken by traders' losses after a brokerage went bust, the U.S. futures industry considered, and then rejected, the notion of insuring customer funds in a broker default.

NEW YORK/CHICAGO (Reuters) - Less than nine months after MF Global's collapse sent shockwaves through U.S. futures brokerages, news that more than half the customer funds at Iowa-based PFGBest are missing is threatening to shatter the fragile confidence in the industry. PFGBest on Monday told its foreign exchange and commodities customers that their accounts had been frozen after an apparent suicide attempt by its chairman. A few hours later, an industry body said about $220 million in customer funds were not in the brokerage's bank accounts. ...

CHICAGO (Reuters) - The complex pursuit of the missing $1.6 billion in segregated customer funds lost by bankrupt broker MF Global could take up to six years to sort out, with full payback to customers unlikely, a top futures industry official said on Tuesday. "Six years, that's my personal estimate," Christine Cochran, an attorney and president of the Commodity Markets Council, told Reuters in an interview on the sidelines of an industry meeting on MF Global at the CME Group offices. ...

CHICAGO/WASHINGTON/CEDAR FALLS, Iowa (Reuters) - The U.S. futures industry reeled on Tuesday as Iowa-based broker PFGBest collapsed after regulators accused it of misappropriating customer funds for more than two years, dealing a new blow to trader trust just months after MF Global's demise. ...

JPMorgan says it received "multiple clear oral assurances from senior MF Global officials" that a $175 million transfer from the firm to cover an overdraft did not include customer money. The claim comes in testimony prepared for a Congressional hearing Wednesday on MF Global's collapse by Diane Genova, JPMorgan's deputy general counsel. It has since emerged that the $175 million did in fact draw on customer funds, in violation of industry rules and contributing to a shortfall of some $1.6 billion.

CHICAGO (Reuters) - The complex pursuit of the missing $1.6 billion in segregated customer funds lost by bankrupt broker MF Global could take up to six years to sort out, with full payback to customers unlikely, a top futures industry official said on Tuesday.