CME's Duffy: Stiffer Penalties Needed For Tapping Customer Funds
December 08 2011 - 6:28PM
Dow Jones News
Tougher punishments should be meted out for futures firms that
dip into their customers' money, in order to defend against another
mess like MF Global Holdings Ltd. (MFGLQ), according to the
chairman of CME Group Inc. (CME).
More frequent and deeper audits were not likely to provide
enough deterrent against futures clearing firms illicitly
transferring protected customer money into firm-held accounts, CME
Executive Chairman Terry Duffy told a House of Representatives
committee Thursday.
"I think the penalties need to be stiffer," said Duffy,
testifying at a hearing of the House Committee On Agriculture
examining the demise of MF Global. "The penalties are too loose and
need to be applied."
The trustee unwinding MF Global's brokerage has estimated that
as much as $1.2 billion in client money could be missing from MF
Global's books, five weeks on from its Oct. 31 bankruptcy
filing.
CME was MF Global's main regulator at the exchange level and
commenced an audit of the firm in late January 2011, with a final
report date in August. The exchange operator also audited records
of MF Global twice during its final week of life, though Duffy said
it appeared the firm tried to evade a thorough accounting of the
customer funds it held on deposit.
If someone is bent on "corruption," Duffy said, no amount of
regulations or audits are likely to stop them.
-By Jacob Bunge, Dow Jones Newswires; 312-750-4117;
jacob.bunge@dowjones.com
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