Reuters: Regulatory News: Investigators launch new round of MF Global exec interviews

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Investigators launch new round of MF Global exec interviews Oct 17th 2012, 21:17 Wed Oct 17, 2012 5:17pm EDT * Both DOJ, CFTC attending the interviews * New inquiries come after authorities met with Jon Corzine * Civil charges more likely than criminal case * One-year anniversary of MF Global collapse approaches By Aruna Viswanatha WASHINGTON, Oct 17 (Reuters) - U.S. authorities investigating the collapse of MF Global have called in former executives of the failed commodities brokerage in recent weeks for additional interviews, people familiar with the inquiry said, as regulators work towards filing civil charges. The new interviews follow a meeting prosecutors and regulators had last month with the firm's former chief executive, Jon Corzine, and suggest investigators have new information they want to ask other officials about. The new push comes close to the one-year anniversary of the firm's spectacular collapse, which left an estimated $1.6 billion in customer funds missing. The company filed for bankruptcy on Oct. 31, 2011, after investors fled following revelations of heavy bets it made on European sovereign debt and the resulting credit downgrades. Investigators have said that the firm appeared to have dipped into customer funds as it desperately shifted money to cope with its liquidity crisis. Neither the firm nor its executives have been formally charged with wrongdoing. The recent interviews included both the Justice Department and the Commodity Futures Trading Commission, but it still appears the more likely outcome will be civil cases rather than any criminal charges, people familiar with the inquiry said. Reuters reported last month prosecutors are close to wrapping up a criminal inquiry and are unlikely to file criminal charges. It is not clear which executives have returned for the latest round of interviews. Investigators do not appear to be seeking sworn testimony yet, a common step before preparing to file civil charges, which indicates such charges could still be months away. Representatives of the U.S. Attorney's office in Manhattan and the CFTC declined comment. A remaining question in the criminal inquiry is whether authorities will provide prosecutorial immunity to MF Global assistant treasurer Edith O'Brien, a central figure in approving the fund transfers that ultimately led to the shortfall. Investigators have not yet spoken to O'Brien, who invoked her fifth amendment right against self incrimination during a March congressional hearing. Corzine testified multiple times before congressional committees, and has specifically named O'Brien as someone who gave him assurances that fund transfers were proper. CONTINUING LITIGATION In addition to the regulatory and law enforcement authorities, the bankruptcy trustee working to unwind MF Global's broker-dealer unit has conducted his own investigation. James Giddens issued a blistering 275-page report in June that criticized Corzine for failing to address MF Global's growing liquidity needs as he tried to build the commodities broker into a global investment powerhouse. Giddens has agreed to cooperate with customers in lawsuits against Corzine and other former MF Global executives. He has also initiated litigation in the UK to secure another $700 million funds that is stuck there, after having already returned about $4.7 billion to former commodities customers. "Our formal investigation ended in June. We continue to use the results to further maximize the return of assets to customers and other creditors," Kent Jarrell, a spokesman for the trustee, said. A Congressional panel, the House Financial Services subcommittee on oversight and investigations, also continues to investigate the firm's collapse and is expected to release a report of its findings in the coming weeks. "My goal is to ensure that we don't have another breach of customer trust like this one, so our report will focus on the regulatory and compliance failures that led to MF Global's collapse," Rep. Randy Neugebauer, who chairs the subcommittee, said in a statement to Reuters. Link this Share this Digg this Email Reprints

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