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CFTC Commissioner Bart Chilton on the investigation into MF Global’s missing customer funds and whether the firm committed anything illegal.
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Rules and regulations in 2012 the Commodity Futures Trading Commission charged with regulating all kinds of companies including MF global where one point two billion dollars is still missing -- our next guest says he has a plan to prevent -- loss like that from happening again Bob Chilton is the commissioner of the CFTC and he joins us now.
-- -- great to talk with you again let's get everyone up to speed on that missing money.
Where does the investigation stand and I guess -- and then -- -- that how can you ensure investors looked something like that won't happen again in 2012.
Not sure actually could be with you guys.
We're looking down all of these trails and we found some of the money but you know we're we're we're off -- -- from being finished with it.
You know I think that something potentially a legal definitely.
I'm nefarious has happened here remember this is customer money that they used.
-- allegedly used rather.
For purposes that it was not intended and a lot of customers guys they didn't know that their money could be used they thought it was safe like it was and -- savings account so.
We're going after it these securities exchange commission is also investigating.
As -- is the Department of Justice so were working on it every day 24/7.
And in the future I'm hopeful that we can have an insurance fund.
Similar to what they have in the securities world and similar to the FDIC in the banking world where if customer money goes awry that there is at least some sort of back stop.
And some sort of protection against losing your savings.
It's -- these -- strong statements -- to have you say nefarious which means pretty Ebola.
Underlying what could have been in this situation at MF global so.
Let's just asked this question in this day and age when we consider the Mars rover to what exactly -- and pinpointed.
Can we not figure out who moved that money through a single electronic fingerprint on a trade and -- -- with that point.
Getting closer and closer to figuring out who moved customer funds which were not to be used for this to other areas that now can't be found.
Right and I you know I can't talk into detail about the investigation -- but I could tell you this.
-- it's not as simple as you might think at the outset it's not just.
-- you know one transfer goes to one place and it was a legal.
It's it's a more complicated and that its sister could -- this involves.
Many firms and it evolves.
An international organization -- so.
You know you get me what anytime you have a regulator in the US and then something goes overseas that involves other regulators and we know how that works in government so.
We're doing our best we've made some significant progress and if we hadn't I'd be saying something about that but we've got really professional investigators on this and I'm confident that we're gonna find most of the money I can't say off but that's why we need this insurance fund also but -- at the yes CFTC -- prevented this in the first place.
-- possibly actually.
But it's always a question of a fine line.
I mean we've never lost many customers haven't lost money.
Here -- -- and so the regulatory.
Apparatus the regulatory regime if you will seem to have worked pretty well this is a sort of a slap in the face wake up call which is why I think -- -- -- -- -- -- -- Look at you had somebody at every one of these firms watching every transaction you could stop it but I don't think that's where we wanna get.
Have been sent to that end.
Can these guys be trusted to self regulate.
Well I I think it's a great question -- -- historical question I mean obviously the answers I mean if if you had.
Jon Corzine in charge -- wanted to take all of these risks but he didn't figure out in the back office to how to make sure that the risks were protected.
Then the -- just wasn't simply there.
-- out but -- again I mean.
It is a one off Liz I mean it when you have to bear.
The -- Bear Stearns went down when -- blame it went down futures customers were protected some -- I'm not making light of this at all.
And and you know that was partly due to the fact that the Chicago Mercantile Exchange really handled everything as well as -- as a pertain to Lehman but let's get to the swaps issue.
Now perhaps that falls under your jurisdiction as far as regulating swaps is concerned when we start to see that happen and -- -- really make a difference.
What should make a -- I mean -- as we all know the the swaps world the over the counter.
Market which was.
Part and parcel to the economic downfall I mean that's where they were trading credit default swaps in all these.
Exotic bets upon bets that was part and parcel to the economic down fall in 2008 that -- still.
Go crawling out of and so congress gave us the authority to -- to overseas.
Those markets and we're talking hundreds of trillions of dollars in transactions.
We're supposed to start doing it last July.
I'm hopeful that we will get most of the regulation done.
In 2012.
If not by July that wondering -- -- by summer I was late.
Very quickly you have some lawsuits LA -- -- released.
Trying to challenge you on this do you think that could be a problem they say you're interpreting the Dodd-Frank role.
In the wrong way.
-- actually -- real quick that's on position limits and we've had position limits in the agriculture commodities for decades.
Congress told us to put those limits on other commodities we're doing so there's a lawsuit challenging us but it's clear people can manipulate these markets if they have too much control we're not going to allow that in the future.
Are to us a favor when you get any news on the MF global money we'd love to hear from you thank you sure thank you.
Bart Chilton of the CFT.
