Top U.S. regulator withdraws from oversight of MF Global

November 5, 2011

A top federal regulator and veteran of Goldman Sachs has decided to stay out of the government’s handling of MF Global, the brokerage firm that landed in bankruptcy days ago under the leadership of another Goldman alum, former New Jersey governor Jon S. Corzine (D).

Gary Gensler, chairman of the Commodity Futures Trading Commission, had played a key role in the decision to put MF Global under the supervision of a bankruptcy court and an independent trustee. His agency is now trying to determine why hundreds of millions of dollars is missing from customers’ accounts.

In light of Gensler’s past associations with Corzine, Sen. Charles E. Grassley (R-Iowa) and others had questioned Gensler’s ability to perform his oversight role objectively.

On Saturday, an official with knowledge of the situation said Gensler has withdrawn from the matter.

“He has taken himself out of any further involvement with the situation related to MF Global in order to protect the career civil servants in our agency and to give everyone the confidence that there is no influence on this matter other than discovering what happened at MF Global,” said the official, who was not authorized to speak for the record.

Gensler’s decision was previously reported by Reuters.

“I know he wants to err on the side of caution and avoid even the potential appearance of . . . conflict,” another government official, CFTC commissioner Bart Chilton, said by e-mail Saturday.

Gensler did not participate in several internal CFTC meetings on MF Global on Thursday and Friday, Chilton added.

At a Senate hearing Thursday, Gensler raised the subject of MF Global and said the CFTC “intends to take all appropriate action . . . to ensure that customers maximize the recovery of funds and, I say, to discover the reason for the shortfall.”

An appointee of President Obama, Gensler served in the Clinton administration. He also was a Senate aide when Corzine was a senator and both of them were working on legislation responding to the Enron scandal.

Comments
Show Comments
Most Read Business