|WASHINGTON-A congressional subcommittee on Thursday will continue its investigation into the collapse of MF Global and how $1.2 billion of the firm’s customer funds went missing.
This will be the second hearing the Financial Services Committee’s Oversight and Investigations Subcommittee has held on MF Global. The Subcommittee began its investigation shortly after the failed brokerage firm filed for bankruptcy on October 31, and its first hearing on the subject in December featured testimony from Jon Corzine, MF Global’s former chairman and chief executive officer.
“Through more than a dozen interviews and review of thousands of MF Global and regulator documents, the Subcommittee has continued its search for answers about how more than $1 billion in customer funds went missing and what brought about the dramatic failure of the firm,” said Oversight and Investigations Subcommittee Chairman Randy Neugebauer. “This hearing will give us visibility into the risk management practices at MF Global in the lead up to its bankruptcy as well as give us an opportunity to analyze how the financial markets and credit rating agencies understood and interpreted MF Global’s risk appetite.”
MF Global held a net $6.3 billion in European sovereign debt exposure prior to its bankruptcy. In spite of this exposure, MF Global’s credit rating was not downgraded until just days prior to its bankruptcy filing. Moody’s Investors Service downgraded MF Global on October 24 and Standard & Poor’s Rating Services maintained its rating of MF Global until October 31, the day the firm filed for bankruptcy. In preceding months, however, the firms had awarded MF Global investment-grade ratings.
Click here to view the memo for this hearing. Thursday’s hearing is scheduled to begin at 10 a.m. in 2128 Rayburn House Office Building.
Witnesses scheduled to testify:
Michael Roseman, former Global Chief Risk Officer, MF Global Holdings Ltd
Michael Stockman, Global Chief Risk Officer, MF Global Holdings Ltd
Craig Parmelee, Managing Director, Corporate and Government Ratings Division, Standard & Poor’s Rating Services
Richard Cantor, Chief Credit Officer, Moody’s Investors Service
James Gellert, President and CEO, Rapid Ratings International, Inc.