U.S. regulators now have a more complete picture of money transfers in the final days of bankrupt brokerage MF Global, but must sort out which transactions were legitimate before more money can be released to customers, a top official told Reuters.
Jill Sommers, who is heading the Commodity Futures Trading Commission's review of MF Global, said regulators "are far enough along the trail" that they know where the money went.
"Now it's just finding out which ones of those transactions are legitimate and which ones of them are illegitimate," Sommers said.
The CFTC and the trustee liquidating the firm are under intense pressure from lawmakers and customers to provide answers about what happened to hundreds of millions of dollars in customer money that went missing as the firm collapsed.
MF Global officials, including former Chief Executive Jon Corzine, have told lawmakers they simply do not know where the money is, and deny authorizing any misuse of customer money.
"We certainly don't want to lead anyone to believe we don't know what happened. We do know, and we see where all the transactions went," said Sommers, a Republican commissioner, in an interview on Wednesday.
She declined to reveal details on the fund transfers until investigators have determined the purpose of all the transactions. Sommers could not estimate when regulators will complete their investigation, but said "really good progress" is being made.
Fellow CFTC Commissioner Bart Chilton, a Democrat, tempered expectations. Chilton said in a statement after Sommers' remarks were published that a thorough accounting of all customer funds remains a work in progress.
"Based upon the most up-to-date information available, I do not have confidence that we know where all the money went," Chilton said.
MF Global filed for bankruptcy on Oct. 31 after it was forced to reveal that it had made a $6.3 billion bet on European sovereign debt, spooking investors and customers.
The ensuing search for missing money has sent reverberations through the farm belt and trading floors, and has attracted the attention of the FBI and federal prosecutors.
A trustee liquidating the firm has estimated the shortfall could be as high as $1.2 billion.
LEGITIMATE VS. ILLEGITIMATE
Sommers said on Wednesday that just because money was transferred out of a customer account to the broker-dealer account "doesn't mean it was illegitimate."
Under certain circumstances, brokerages are allowed to take customer funds and invest them in a range of approved securities.