Senate Ag Committee schedules regulatory oversight hearings

Senate Ag Committee Chairwoman Debbie Stabenow this week announced two upcoming regulatory oversight hearings as word began to spread about another loss of customer funds in futures trading accounts.

The first hearing is scheduled for Tuesday, July 17. The Senate Committee will hear testimony on the continued implementation of the Dodd-Frank regulatory reform law. Scheduled witnesses include Commodity Futures Trading Commission Chairman Gary Gensler, Securities and Exchange Commission Division of Trading and Market Director Robert Cook and industry participants.

The Ag Committee will have a second hearing on August 1. That meeting will focus on the aftermath of the MF Global bankruptcy, which left approximately $1.6 billion in customer money unaccounted for and is still being untangled by regulators, investigators and the bankruptcy trustee.

These hearings follow Tuesday’s bankruptcy filing by Peregrine Financial Group Inc., PFGBest, with an estimated customer funds shortfall of $215 million. As in the MF Global case, a trustee will be appointed to oversee the return of segregated customer funds and distribute the proceeds of company assets as directed by the courts.

The CME Group said Wednesday that family farmers and ranchers with assets caught up in the brokerage’s collapse will be eligible to draw upon the exchange operator’s new insurance fund, put into place after MF Global’s collapse. The fund provides up to $25,000 per account to customers who suffer losses from the insolvency of a futures brokerage.

Since PFGBest is a much smaller firm and believed to be less complex, it is possible that the bankruptcy case could proceed more quickly, experts say, though the process and timeline, as seen in the MF Global case, is quite complicated.

Source: National Association of Wheat Growers