Opening Statement
Chairman Randy Neugebauer
Oversight and Investigations Subcommittee
“The Collapse of MF Global Part 3”
March 28, 2012

Thank you all for attending this important hearing on the collapse of MF Global, the eighth largest bankruptcy in our nation’s history. This is the third in a series of hearings analyzing the failure of the firm. Through our ongoing investigation we have begun to understand the regulatory and corporate failures that led to the destruction of a 228-year-old company. But more importantly, we are starting to get concrete answers on how $1.6 billion of customer funds could have gone missing.

At our first hearing, we learned that the various federal government agencies charged with regulating MF Global failed to coordinate and share vital information in the months leading up to the collapse of the firm. This was despite the Dodd-Frank Act’s promise to “facilitate information sharing and coordination” among regulators. Our second hearing examined whether and to what extent the risk controls, policies, and procedures that had been in place at MF Global were short-circuited by senior management, most notably by MF Global CEO Jon Corzine.

Today’s hearing will examine the events that took place during the final week of MF Global’s operations before the firm filed for bankruptcy on October 31, 2011. Through this hearing we are hoping to learn how and why there was a deficiency in customer funds, which MF Global’s FCM business was required to keep “segregated”. As we are all acutely aware, mandatory segregation of customer funds is the cornerstone of the futures business; therefore it is completely unacceptable to have a shortfall - let alone one as high as $1.6 billion. We are hoping to get more concrete answers from our panel today on how this could have happened.

As we examine all aspects of MF Global’s collapse we cannot forget the human side of the aftermath. The customers of MF Global were farmers, ranchers, retirees and everyday investors. All of them were relying on the fact that property rightfully belonging to them remained safe, but as we found out, that was not the case. This hearing will hopefully give them some level of comfort, and will demonstrate to them—and the American people—that we will not tolerate similar calamities and that we work tirelessly to restore confidence into the commodities markets.

I want to stress that this is not a trial; it is simply an oversight hearing that will help inform the eventual policy debate surrounding the collapse of MF Global. This is the type of investigatory work this Committee should have done following the Financial Crisis, instead of rushing to pass the Dodd-Frank Act.