By Douwe Miedema and Aruna Viswanatha
Nov 15 (Reuters) - A U.S. congressional panel suggested on
Thursday that the Securities and Exchange Commission and
Commodity Futures Trading Commission merge, saying their failure
to share information contributed to the collapse of futures
brokerage MF Global.
A House of Representatives subcommittee said MF Global's
last chief executive officer, Jon Corzine, was the main culprit
in the demise of the group in October 2011, but it also blamed
missteps by credit rating agencies.
The subcommittee's report said Congress should explore
whether it would be better for the SEC and CFTC agencies to
"streamline their operations or merge into a single financial
regulatory agency that would have oversight of capital markets
as a whole."
Corzine, an ex-Goldman Sachs Group Inc co-chairman who also
served as a U.S. senator and as governor of New Jersey, has
denied any wrongdoing.
U.S. authorities probing the firm's collapse have not
brought any formal charges.
MF Global filed for bankruptcy more than a year ago, as
investors scrambled to pull out funds because of credit
downgrades and fears about the firm's heavy bets on European
The 2010 Dodd-Frank overhaul of Wall Street has not
addressed the fact that U.S. capital markets are overseen by two
powerful supervisors, the SEC and the CFTC.
Merging the two would be hard to achieve politically because
the House Committee on Financial Services oversees the SEC,
while the CFTC is under the House Agriculture Committee.
The report cited one example showing the two regulators were
at odds over what to do when MF Global was in its death throes.
MF Global General Counsel Laurie Ferber told one SEC staff
member that, against the explicit instructions from that agency,
the CFTC had pressured the company to transfer money from a
securities reserve account, the report said.
"Without telling us? That is unacceptable," SEC Chairman
Mary Schapiro said in an email, according to the report.
The report also blamed the New York Federal Reserve for
giving MF Global a prestigious primary dealership, even though
the firm had a track record of "prior risk management failures
(and) chronic net losses."
Credit rating agencies Moody's and Standard & Poor's, a unit
of McGraw-Hill Cos Inc, failed to determine that Corzine's
strategy of transforming MF Global into an investment bank would
increase the company's risk profile as it took on greater
proprietary trading positions, the investigation found.
(Additional reporting by Emily Stephenson)
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