Reuters: Regulatory News: UPDATE 1-Trustee says no bonuses for MF Global employees

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UPDATE 1-Trustee says no bonuses for MF Global employees Apr 24th 2012, 20:31 Tue Apr 24, 2012 4:31pm EDT * Trustee Freeh says never his intention to pay bonuses * CFTC's Sommers lays out CFTC enforcement scenarios * Says can take action against managers who "aid and abet" * Trustee Giddens suggests greater ability to go after execs By Dave Clarke and Alexandra Alper WASHINGTON, April 24 (Reuters) - The trustee managing MF Global Holdings Ltd's assets in bankruptcy told lawmakers on Tuesday that he has no plans to pay bonuses to executives of the collapsed futures brokerage as he tries to recover funds for creditors. "Bonuses are not part of my consideration now, and they have not been in the past," Louis Freeh told the Senate Banking Committee. Last month, lawmakers and MF Global customers reacted angrily to reports that Freeh planned to ask a bankruptcy judge for approval of a retention plan that would include performance-based incentives for Operating Officer Bradley Abelow, General Counsel Laurie Ferber and Chief Financial Officer Henri Steenkamp. Ferber, Abelow and Steenkamp were kept on the payroll to help Freeh recover assets for creditors of MF Global's parent company. On Tuesday, Freeh said bonuses have never been part of his plan. "I want to make it very clear, it was never my intention to pay any bonuses," he said. "I never had a plan in place to pay any bonuses to senior executives." Freeh's statement soothed some lawmakers' but the latest congressional hearing on MF Global provided few answers to what happened to customers' money after the firm's collapse, or what punitive actions may be taken against its executives. The futures brokerage, which was led by former U.S. senator and New Jersey Governor Jon Corzine, filed for bankruptcy on Oct. 31 after investors and customers became rattled over its $6.3 billion bet on European sovereign debt and its credit-rating downgrades. Corzine resigned as chief executive days later. Since that time, regulators and bankruptcy officials have been trying to determine what happened to as much as $1.6 billion in customers' money. Congressional investigators and enforcement authorities are also probing how much top-level and second-tier executives of MF Global knew about potentially improper money transfers. Corzine has told lawmakers that he "never intended" to break any rules and that he did not give instructions to misuse customer funds. He did say that others could have misinterpreted directions to "fix" a fund shortfall. Neither MF Global nor its officials have been formally charged with wrongdoing. At Tuesday's hearing, government officials said they were still investigating whether anyone had broken the law or run afoul of regulations en forced by several agencies. "It almost gives you a headache to think about all the various regulators involved in one entity," Republican Senator Bob Corker said. "What happened to the customer accounts? How did the money end up in places that it was not supposed to end up?" Jill Sommers, who is heading the Commodity Futures Trading Commission's probe, said her agency has the power to go after executives who "aid and abet" violations by their companies. Sommers was careful to say that her comments did not mean the CFTC had reached any conclusions as it probes why customer money is missing. "Staff is speaking with witnesses and reviewing documents and other information," said Sommers. "They are proceeding as expeditiously as they can." James Giddens, the bankruptcy trustee tasked with recovering as much money as possible for former MF Global customers, threw his support behind making it easier under law to impose civil fines on executives when their commodities brokerages lose customer money, even without proof they intentionally broke rules. He told lawmakers it was time to "Consider saying, 'It's not enough when you are managing the firm. You are determining investments and the overall strategy ... you will bear some responsibility if there are shortfalls in customer property." Freeh said he would pursue all legal options for recovering assets for creditors, including going after MF Global executives and banks involved with the company. "At this point literally everything is on the table, both individual persons as well as institutions," Freeh said. Link this Share this Digg this Email Reprints

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