June 15, 2012 / 5:18 PM / 6 years ago

Chilton wants CFTC's own attorney on MF Global

WASHINGTON (Reuters) - A U.S. futures regulator said he was keen to see his agency hire its own attorney in Britain to help recover customer funds lost during MF Global’s chaotic final days.

The sign marking the MF Global Holdings Ltd. offices at 52nd Street in midtown Manhattan is seen in New York November 2, 2011. REUTERS/Shannon Stapleton

Bart Chilton, a member of the U.S. Commodity Futures Trading Commission, told Reuters he wondered whether attorneys hired in Britain, by a trustee liquidating the failed commodities brokerage, would effectively represent futures customers.

“I believe we need to have our own counsel in the UK,” Chilton said. “I’m no longer convinced that our interests are aligned, and out of an abundance of caution and concern that we are doing all that we can to protect customers’ money, I think we should have our own UK counsel.”

James Giddens, the court-appointed trustee, estimates that MF Global clients have lost as much as $1.6 billion in funds, some of which is tied up in the United Kingdom.

Giddens is preparing for trial next year in Britain against KPMG, MF Global’s European administrator, over some $700 million held there that Giddens says belongs to U.S. customers.

In response to Chilton’s comments, a spokesman for Giddens said the CFTC was free to hire its own counsel, but the trustee was 100 percent aligned with the regulatory agency.

“There is not one scintilla of difference in the goal, to get the money back as quickly as possible from the UK,” said Giddens’ spokesman Kent Jarrell.

MF Global filed for bankruptcy on October 31, after investors and customers were unnerved by the firm’s $6.3 billion bet on European sovereign debt and downgrades by credit rating agencies, resulting in a liquidity crunch.

The bankruptcy and missing funds have been the focus of several congressional hearings and are under investigation by federal agencies, including the FBI and the CFTC.

None of the firm’s employees have been accused of wrongdoing by the government.

On Thursday, Giddens said he had reached an agreement with CME Group Inc to return $175 million in MF Global property, $130 million of which is earmarked for former customers of the firm.

MF Global customers who traded on U.S. exchanges have, to date, received about 72 percent of their claims.

Editing by Tim Dobbyn and Bernadette Baum

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