i am not going to be able to really comment on that. >> to you have any idea why the decision would be made to do this, mr. michael roseman? de of any president? >> i don't have the expertise why the decision was made. ..

does that raise a red flag to you? does it seem odd or strange or cause you any reason to question? >> i think it is a reasonable question. in deciding the basis on which to answered the question from the is -- >> you don't want to answer the question. that is fine. if you don't have an opinion you don't have an opinion. we have two companies. one is the mf global inc. and the others beholding company. the two that we are running and on today are where the problems lie. there are a bunch of other things but those of the main entities we are focusing on. correct? >> a huge risk officer for both? >> correct. >> you are the risk officer for both. >> didn't organize ourselves on an entity basis rather than a

global basis. >> what were your responsibilities in the holding company? what looks like happened -- maybe i am crazy -- i think the inmates were running the asylum and that is why this happened in the first place. we have massive leverage happening in the holding company. leverage that she first officer said he had problems with $2 billion and it went way beyond. jon corzine didn't like the answers he was getting from mr. roseman so he hired you. leverage keeps going. very risky. market conditions continue to change and margin calls happen. when margin calls happen the liquidity wasn't there and in the final hours in the mayhem someone which we yet to find out but everyone has a good idea to transfers money from segregated accounts over to the holding

company. and that is where the money is. that is hypothetical. i am wondering now when you look back if you're the chief risk officer for both, the holding company, what safeguards were explained keep that from happening. i want to read to you here is the latest. to customers. and your assets are protected by multilevel safeguard the. stability, separation and protection. as the chief risk officer for both of these entities is this true? is their stability, separation and protection? >> i have no reason to doubt that. >> you have a great reason. $1.2 billion is missing.

thank you very much. >> mf global filed for chapter 11 bankruptcy protection on october 31st of last year. the eighth largest bankruptcy in u.s. history. shortly thereafter jon corzine stepped down as head of the company. most of the questions surrounding the bankruptcy about $1.2 billion in customer money that has gone missing. members of congress as company officials about that missing money in a number of hearings as you can see here. the house and senate agriculture committees held hearings in december and the house financial services committee has held three hearings so far and those are the ones we will look at today. we are showing you portions of these hearings today but you can always watch them in their entirety at our video library at c-spanvideo.org. >> the pope has a famous way of being determined with the camera

-- a cardinal level post. the pope handpicks this person and this person decides when the pope is dead. he hits him ft. 33 -- three times in the head and calls his baptismal name which is carried over from the romans. the romans used that message of yelling your name at you three times. even today the pope isn't that until he says he is dead. >> saturday night on after words, dick teresi discusses death and the business of organ harvesting is blurring that line. on booktv pennsylvania senator arlen specter on the split between old-guard members of his former party and those supported by the tea party. booktv every weekend on c-span2. joining us is filled mattingly, finance correspondent with bloomberg news. what financial firm was mf global and what was jon

corzine's roll? >> mf global dealt with derivatives and ended up filing for bankruptcy, jon corzine was governor of new jersey, democratic senator from new jersey plug it in as a ceo in 2010 and leading the firm, prior to his political career been chief executive officer at goldman sachs and leading the firm at the time of its failure. >> what caused the collapse of mf global? >> investigators identified one major problem and that was the massive bet on european sovereign bonds. the euro zone. countries that are in so much trouble right now, roth, spain and folks like that. and bonds in europe. they are always able to cover as the situation continues to worsen and they're short of

funds. >> we look at one of the house financial services committee hearings on mf global. the house and senate held a number of hearings on the issue. what were members seeking to find out in the hearing? >> the biggest thing lawmakers have been focused on is according to the trustees a shortfall of $1.6 billion in customer funds. this is pretty unheard of. most importantly from a lawmaker perspective many of these funds, mf global worked heavily in futures, money and accounts from farmers, ranchers and constituents especially in agriculture space. this has been a primary focus, the one and only focus for the committee's. what happened to this money and where is it now? >> financial services committee. will they hold more hearings? are they issuing a report? >> they are issuing a report. the hearings held in december last year which jon corzine testified at were largely informational hearings.

the house financial service committee commenced an investigation of it. they handled three hearings so far. randy neugebauer said we are not sure. there are no more hearings scheduled but we are done. the expectation is there will be a full investigation report released sometime in the summer. >> what about side congress? are there other investigations under way? could there be civil and criminal charges in this case? >> the federal government is looking into it. department of justice looking at it. security and exchange commission and commodity futures trading commission. one of the most interesting things we found out at the financial services hearing is the department of justice has most senior executives at mf global cooperating with that case. they have been released anything in terms of what they're looking at or if charges will be filed but we do know they are in the room and working actively on this investigation. >> phil mattingly is the correspondent for bloomberg news. thanks for the update.

>> you are welcome. >> more now from the house financial services committee hearing looking into the mf global bankruptcy. in this next portion you will hear from a pair of chief financial officers for the company. it is about an hour and 45 minutes. >> now i am going to recognize our first panel lori ferber, general counsel of mf global holdings ltd.. mr henrik steenkamp and kathleen serwinski and edith o'brien, assistant treasurer. we recognize each of you for your opening statement. first of all i need you to stand and raise your right hand. do you solemnly swear and affirm the testimony you are about to give will be the truth, the whole truth and nothing but the truth? thank you.

you may be seated. without objection your written statements will be made part of the record and at this time i will recognize miss ferber for your opening statement. >> chairman neugebauer, ranking member capuano and distinguished members of the subcommittee. my name is -- >> start to interrupt. could you bring them closer to you and make sure that light is on? there you go. >> my name is lori ferber. since june of 2009 i served as general counsel mf global. sins the bankruptcy filing of mf global holdings i have remained with the company to assist the bankruptcy trustee and the bankruptcy professionals in their efforts to maximize the value of the mf global estate. i up my testimony will assist the subcommittee in an effort to understand what happened at mf global during the term's final days.

i was born and raised in the bronx. new york and received bachelor's degree from new york buffalo and graduated from new york university school of law. prior to mf global i served as general counsel of commodities are fixed-income to financial services firms. as general counsel of mf global i supervised the legal and compliance functions. >> could i bring the microphone close? when you look down it gets hard. those people in the back restraining to hear. >> as general counsel of mf global eyes to provide legal and compliance functions. my response -- responsibilities include managing legal functions to support the firm's evolve in business and advising board and senior management and facilitating mf global's relationships with its regulators. mf global's legal department include approximately 17 attorneys and 12 other professionals. the legal team was assisted by outside law firms with expertise

in various areas of law pertinent to mf global's operating business. the global head of compliance with substantial experience in expertise of compliance matters and manage the global department of 80 people reported directly to me. i report directly to the chief executive of mf global and interactive frequently with the board of directors. my focus during the last week of mf global's operation was to make sure legal and compliance department and outside counsel were available and prepared to support the firm as it attempted to deal with the rapidly unfolding events of mf global's last days. the firm's senior management and board of directors reacted to those events by initially seeking to sell all or part of the firm and severely reducing its balance sheet and seeking to make sure the firm met all of its obligations. ultimately when the sale of the firm became impossible mf global holdings had no viable options other than to file for

bankruptcy protection. throughout mf global's final weekend i was in mf global's offices in new york for all but a few hours as were many members of mf global's senior management. the board of directors was also present at mf global offices carefully monitoring events and receiving constant updates. my colleagues and i were in frequent contact with many of mf global's regulators during this time. these include the sec, cftc, si boc, finra and federal reserve bank of new york and financial services, u.k. financial-services regulator. keeping regulators informed was one of my top priorities. that includes spending. most -- october 30th, working with regulators to agree on terms the firm would be sold and accounts transferred to a buyer. it was shortly after concluding that process and likely before

midnight october 30th that i learned the firm was unable to reconcile the fund accounts. i was shocked. i believe the firm had in place a full compliance system operated by highly qualified professionals who work controlling and securing customer funds. as a last effort senior people from potential buyer, people from finance and operation teams to provide a fresh set of eyes to help identify the reconciliation errors. once the inability to reconcile the accounts became clear, and 2:00 a.m. we know the price of regulators. later that morning after several hours of discussion with regulators who made the bankruptcy filing. sins that filing have been assisting in complex efforts -- global efforts to maximize the value of bankruptcy estates for all mf global stakeholders. i will try to answer any questions you have. >> next will be mr. steenkamp.

>> but chairman neugebauer leaders and ranking member capuano -- >> i will ask you to pull that closer to you and ask whoever is in charge of sound in the building to see if we can turn these microphones up a little bit. having a difficult time hearing and so are the panelists. >> chairman neugebauer -- is that better? >> yes. >> thank you for the opportunity to make this brief statement. my name is henry steenkamp and i am chief financial officer of mf global holdings ltd.. a position i have held since april of 2011. let me say at the outset i am deeply saddened, upset and frustrated that money belonging to mf global's customers has not been returned in full. i know my reaction cannot be compared to those of the people who are suffering with this issue. along with certain other senior

executives of mf global holdings ltd. i have remained at my post following the bankruptcy filing and working diligently with chapter 11 trustees to do what i can to maximize value of the firm for all interested parties. that said, because sir interest these rules and policies, i have unfortunately not been able to participate in the current efforts to return customer funds. i am deeply distressed by the fact that customer money has not been fully repaid, i have limited knowledge of specific movement of funds that the u.s. broker-dealer subsidiary mf global inc. in the last two or three business days prior to the bankruptcy filing. this is in part because of my global role and partly in part because during those days i was taken up with other very serious matters. as global cfo i had many functions. principal among them was the effort to insure the holding

company's consolidated financial accounts, complied with all u.s. accounting and reporting requirements and work closely with investors and the rating agencies. as its name suggests mf global holdings ltd. my employer is a global holding company with approximately 50 domestic and foreign subsidiaries. each of these regulators subsidiaries generally had its own or regional chief executive officer, chief operating officer, chief financial officer and others obligated to independently discharge the customary duties of those officers according to its jurisdiction, regulatory requirements. all of these positions were held by highly experienced professionals dealing regularly with local regulators. direct involvement with operational matters such as bank accounts or fund transfers has never been part of my duties. it is important to understand the way in which segregation issues were handled at mf global

inc.. the subsidiary that affects in the ordinary course of business. to avoid confusion it is necessary to refer to mf global inc. i will call it an f g i. m f g i held all customer funds required by law to be segregated and all segregation calculations were performed by experienced personnel in chicago overseen by finance professionals. to my understanding and fbi segregation of client funds had been reviewed repeatedly by firms outside auditors and regulators over a longer period of time. as a general matter i was not involved in details of segregated funds. in the course of my duties as global cfo nor were the complex segregation calculations performed by mfgi in chicago and reported to regulators on a daily basis. the week prior to the bankruptcy filing saw among other things multiple rating agency downgrades in quick succession. extraordinary liquidity stresses

and effort to sell all or a part of the firm. with a time of constant pressure and little or no sleep with significant number of critical issues to resolve. as the cfo of the holding company my attention was focused on crisis management and strategic issues relating to the sale of the company. on october 24th, 2011, moody's announced it was downgrading mf global credit rating by one notch leading the firm with the lowest investment-grade rating. this was followed by further downgrades throughout the rest of the week. the speed and severity of which were unprecedented in my experience placing extraordinary pressure on the firm's liquidity. as the situation deteriorated the sale of the merchant business and/or the entire firm was pursued. in between my dialogue with rating agencies i dedicated my time to the daunting task of facilitating the diligence necessary for an acquisition or asset sale almost exclusively in the period command on the evening of october 27th and ending with the decision to file

for bankruptcy on the morning of october 31st. as i recall on sunday, october 30th with the deal of the acquisition of all or part of the company was close at hand either in the base serious issue with mfgi segregated fund operations. as the subcommittee is aware efforts to reconcile the segregation calculations were not successful and the deal fell through. i along with others from mf global promptly notified regulators about desegregation issues. i understand the subcommittee, mfgi customers and the public have many questions about customer funds. i share many questions and i am frustrated and distressed that they remain outstanding and the funds have not been repaid in full. i would be pleased to answer the subcommittee's questions. >> mrs. serwinski legally

recognize. >> chairman neugebauer -- >> i will ask you to do the same thing and tilt it down a little bit. there you go. try to talk as loud as you can. i don't know what is going on here. >> thank you for the opportunity to testify. my name is christine serwinski. at the time of the events in question i was chief financial officer of mf global inc. the firm at north american broker-dealer and future commissions merchant. in my position as cfo of mf global inc. i was responsible for accounting and regulatory accounting teams. in light of the subcommittee's focus on the events of the week of october 24th it is important to note the department responsible for the transfer of funds into and out of the company, treasury operations and securities operations did not report to me. i am aware the subcommittee is particularly interested in the events of the week prior to the

october 30th bankruptcy. i will do my best to provide whatever information i can but i was away for the majority of that weekend i apologize in advance if i am unable to ask a great deal of detail. on monday october 24th, moody's downgraded mf global's credit rating. on tuesday there was an earnings call. on that same day i left chicago for period of vacation. i had every reason to believe that the firm was on solid ground prior to my departure. before leaving i spoke to members of my staff and drafted e-mail to co-workers to ensure that all the functions of my office would be covered. all of my colleagues and subordinates knew how to and did reach me as necessary during my absence. i had access to e-mails on my blackberry. i wrote e-mails when i could.

i also spoke to people at mf global on the telephone from time to time throughout the week. all communications with mf global employees indicated things were very busy but i was assured that everything was under control and no time had anyone suggested that i should return to the office. nonetheless, late in the day on thursday i decided to come back to chicago day early on sunday. i was not alarmed but i believed it would be better to return early given the level of activity at the firm. after receiving varying reports earlier in the day and upon arriving at the office sunday evening i was informed, there appeared to be a segregated secured deficit of approximately $900 million. i dove into the accounting with

my team believing this must be an accounting error because such a large deficit is simply inconceivable to me. early monday morning, i was handed a piece of paper that identified transactions that according to calculations accounted for the shortfall in segregated accounts. i then realized the system of segregated and secured funds was not an accounting error. we informed representative at the cme and my focus immediately shifted to identifying all funds within mf global that might be transferred into the segregated and secured environment as quickly as possible. we worked relentlessly throughout the early morning hours and indeed throughout most of the day on october 30th to bring segregated and secured accounts back to the appropriate levels. some of the funds transferred to

the segregated and secured accounts the delay number of submitted wires were not executed by the banks and we were unable to move sufficient funds to make up for the shortfall. some time on october 31st i learned that mf global had filed for bankruptcy, that we were under civic protection and that the firm could no longer engage in further financial transactions. shortly thereafter, specific trusty asked me to stay on at mf global to assist in the wind down of the business which i agreed to do. i look forward to addressing to the best of my knowledge and ability any questions the subcommittee may have. thank you. >> thank you. we have been instructed that miss o'brien does not plan to give an opening statement at this time and we will therefore begin our questions at this time.

miss o'brien, on friday, october 28th, 2011, mf global transferred $200 million from the segregated customer accounts to the house account and subsequently sent $175 million of money from the house account to the mf global uk account to cover an overdraft. in december [speaking in native tongue] testified here -- jon corzine testified that you comply with rules about customer segregation. reportedly you dispute jon corzine's testimony. let me ask you today, mr. o'brien, did you give jon corzine assurances that farmers and ranchers money that was in mf global's account, segregated accounts. did you give him assurances that that money was not their money?

>> respectfully decline -- >> you're going to have to -- >> on the it price of counsel i respectfully decline to answer based on my constitutional rights. >> i am going to yield to mr capuano. >> miss o'brien, i understand and respect your constitutional rights that there was an article in today's wall street journal or yesterday's, stated that you are trying to negotiate immunity with federal investigators. i am curious if that article was accurate or inaccurate. i'm not asking about anything but happen that mf global. i am simply asking is that news reports and accurate report? >> on the advice of counsel i respectfully decline to answer based on my constitutional

rights. >> miss o'brien, subcommittee asked you to testify so that you could help use your background and experience to solve a very serious matter to try to find out exactly what happened and how we can keep this from happening again. we are extremely disappointed that you have chosen to do that. i will ask you not the intent to invoke your fifth amendment right as opposed to any questions of that they ask on these subjects today? >> i will. >> i am disappointed. because of your answer. but i believe you have important knowledge and i am hopeful that some point in time that you will reconsider and come back and testify before this committee. but at this time with unanimous consent i am going to dismiss mrs. o'brien from the panel. you are dismissed.

i will continue the question -- what we will do at this point in time is mr. capuano and i will reset the time and begin question and answer period again. miss serwinski, on 10-28, mf global transferred $200 million from segregated accounts and subsequently transferred $175 million to the u.k. affiliate to cover overdrafts. in an interview you had with our committee you stated that if you were working that day it was very unlikely you would have approved $175 million transfer because it could have violated sec net capital rules. can you explain that for me?

>> the transaction of $175 million as i understand it was an intercompany loan between mf global inc. and for ciliate mf global global limited. as i understand the $175 million was being taken out of customers segregation. there are two things i would have looked at. with respect to the transfer. the firm has been referred to as the firm invested in excess segregation and secure funds with that $175 million brought that level to a negative. the firm could be in regulatory compliance but it would have breached its own internal policy. the second consideration would have to be evaluated was potential impact on the excess net capital of the firm.

that number without being adjusted, would have brought the firm to a potential under early-warning situation which wouldn't have been able violation but would have required a recording to the regulator. >> i want to go back to my question. had you been there on that day would you have approved that transfer? yes or no? >> i honestly don't know what all the circumstances were around the transaction but it would be -- the impact would have breached regulatory rule. i don't believe i would have approved it. >> would you have approved the transaction knowing what you know today? yes or no? >> no. >> thank you. you are aware of an e-mail that edith o'brien described this $175 million e-mail states that

per jon corzine, is it normal course of business for the ceo to make instructions on wiring funds? did that happen on a regular basis when you were on your watch? >> no. >> this would be -- out of the ordinary for jon corzine to start calling people and instructing them to start wiring money? >> i believe that would be an unusual event. >> thank you for that. according to cme on the afternoon of thursday, october 27th in representative of cme group sent a letter to you, miss serwinski and mr. bolling and stated effective immediately any equity withdrawals from mf global inc. must be approved by cme group audit department. basically cme telling mf global not to move its own capital out

of mf global without cme's approval. who did you disseminate that information to when you received that letter? >> i don't recall. it went directly to our finance group and to myself. i cannot remember what i did that thursday. i know i recall having conversations where people were aware. >> did you see approval when he made the $175 million transfer to mf global uk before you moved that money? did you notify cme that you were making that transfer? >> i was not aware of the transfer before it was made so i would not know that. >> if you didn't, you don't know who you disseminated the information to so not everybody got the memo. is that what you are --

>> again the memo went directly to key finance people and the key people operating the transfers and things were all in chicago. i really don't recall. >> mr. steenkamp, you said you are the cfo for global and you are addressing very important issues affecting the company at that time as the cfo. is that your testimony? >> that is correct. >> wouldn't you think the liquidity of the company would be one of the important aspects of an entity the size of mf global based on its business? if they were having liquidity problems would that be something the cfo should be involved in? >> there were many things going on at that point. >> that wasn't the question. the question is is liquidity of the corporation an important

role of the cfo? >> the liquidity -- >> yes or no question. this is not rocket science. is the liquidity of the corporation an important piece of a role of chief financial officer of the company? >> yes. the liquidity is critical unconsolidated basis. >> i am surprised you have very little knowledge about the transfers and these were not small transfers of money. margin calls, people trying to liquidate a position to create liquidity and you say you didn't have much knowledge of that. >> when it comes to the liquidity i was looking get liquidity and a global consolidated basis. that with a transfer within mf global inc.. it was important but there were many liquidity events occurring across the firm not just in chicago but across the whole globe that we were dealing with. >> how was liquidity going?

>> we slowly experienced throughout that week a drastic change in liquidity from wednesday to friday and the last couple days significant liquidity stress. what one would call not too dissimilar as that friday as a run on the bank. >> my time is up. i will turn to ranking member capuano. >> i don't have a clue what questions to ask any of you because the general counsel of mf global says a i didn't know what was going on. i had nothing to do with this and chief financial officer of mf global holdings ltd. saying not my job. i didn't do it. the chief financial officer also said it is mf global inc.'s issue. i don't have anything to do with the. i have the chief financial

officer of north america mf global saying i was on vacation. so how am i supposed to ask you questions if none of you apparently knew what was going on or claim to not know what was going on leaders will have no information whatsoever. how did this company run? did anybody in the company, anyone have authority to transfer customer funds? mr steenkamp? did anybody have that authority? i know you sit in your recent statement you didn't but who did? >> my responsibility was to oversee the global finance function. i was not responsible -- >> i know what you were not responsible for. i read the testimony. you were not responsible for anything. who was responsible for deciding to transfer customers' funds? if not you, find, i read your testimony. who? >> the transfer of customer

funds would be the authority would be president in each of the local regulatory entities. in chicago -- >> who would that be? a name? >> it would be between the finance team, this serwinski's team -- >> that is what i read in your testimony but want to make sure i read it right. miss serwinski, mr steenkamp things you have the authority. you have the authority? did you have the authority to transfer customer funds? >> i did not have the authority to transfer customer funds. in my opening statement, the transfer of customer fundss was managed by the treasury group, treasury operations group and security operations. >> i thought you were the chief financial officer. treasury reaped -- debate not report the? did a report to? >> they reported to the global treasurer. >> who in the treasury group would be the person responsible for making that decision? >> making the decision?

>> to transfer customer funds. >> it would be the assistant treasurer of the global treasurer. >> names? >> edith o'brien. >> i have not seen a corporate organizational table for all of mf global. i understand it was 50 or 80 different companies so it will be fun to try to read it but of all but people that will probably show up on the corporate ladder i am willing to bet miss o'brien's name will not show up. and she however was the only person, the top ranking person to say let's take all the customer funds and do whatever we feel like. if that is the case i think we have more than a little -- after reading this testimony and listening to you reminded me a lot of a hearing we had in this committee i don't remember how

many years ago on and raw. mr. skilling is, mr. way, i will -- title them what i will tell you. is it ok? none of you did. no one did anything wrong but there are a billion dollars missing. here's what you should be concerned with. not us. we are not the appropriate investigative body to determine who had that responsibility. here is your concern. the people sitting next to you. because somebody is going to say something to the appropriate investigator to save this is the person who had final responsibility. when that happens is going to be problems for those individuals. i wish i could find -- one other question. all of you working for mf global before these problems arose. is that correct? did i read your testimony correctly? you are all still working there? >> no longer there.

>> i will ask mr. steenkamp. the reports that mf global is considering bonuses. are you in line for those bonuses? >> as far as i am aware -- no bonuses. >> the other side. >> well-paid employees of a major company that somehow has misplaced or misappropriated billion dollars of customer funds and yet you are asking the trustee in bankruptcy -- not you but someone is asking the trustee in bankruptcy to give bonuses to the very people who may or may not have had something to do with this? you see that as a potential little issue? mr steenkamp, you think that would be appropriate for the trustee in bankruptcy before we know what happened to be giving out bonuses to people who were there and may have had something to do with creating this problem? >> that is not a decision that lies in our hands.

we believe the trustee will make a decision -- >> you think that is appropriate? would you advise your clients that is a good idea? >> a totally defer to the trustee. my focus is on helping the trusty in his responsibility to figure out how to manage the bankruptcy and retain full employees and everything else. >> very tough. i appreciate your consistency in having nothing to add to this discussion. as i said from the beginning of wasn't what sure what questions to ask. apparently spent six minutes and done just that. thank you. >> i thank the gentleman and mr. fitzpatrick is recognize. >> mr. steenkamp, on sunday, october 30th did you instruct anybody at mf global to hold off on contacting regulators about mf global's segregated deficiency?

>> i have no memory of instructing anyone to hold off. >> you have no memory of instructing anybody? miss serwinski, you state on page 3 of your testimony that on saturday i was initially told desegregation and secured statement from friday showed the firm to be undersegregated. who told you that? >> someone on my staff. i don't know who the person was but someone on my staff. >> you need to pull the microphone closer. >> someone on my staff. >> who is that? >> i don't recall what was the regulatory capital controller or the controller. >> it would be a pretty significant piece of information you received the day you returned back from your vacation. correct? you don't remember who told you

you had a significant deficiency? >> originally when the calculation was done on saturday morning it showed a deficiency. my department was assured by the treasury or treasury operations group that there was a reconciliation item or issue to be resolved. saturday afternoon to do just that. on sunday morning before i boarded a flight back to chicago i was informed that the firm might have been truly undersegregated at that time as of the 28th. when i landed and received information to say we were not undersegregated, when i went to the office i was told yes, in fact, we were undersegregated and that is when the team looked to see how that could be the

case. >> miss serwinski, did you inform anyone else of that fact? >> once we determined that the funds had in fact not been an accounting error but an actual deficit, we contacted the cme who was on the premises and contacting either my colleagues in new york at that point. >> that was saturday? >> no. that was probably very early in the hours of monday, october 31st or the very late sunday, october 30th. >> you would have waited two days to let anybody at cme know about the deficiencies? >> we did not believe -- i did not believe it was a deficiency at that point. we believe as i mentioned it was inconceivable to meet that the firm could be undersegregated by that substantial amount. >> but it was in fact deficient

by that substantial amount. >> was brought to my attention later on in the very early hours of october 31st that in fact it was in deficiency. >> under segregation is a hugely significant violation the, is not? >> yes, is. >> you didn't inform management or any regulator of the significant fact? >> i did after i was confirmed was an actual segregation situation. >> on friday, october 28th j. p. morgan chase said the letter asking mf global to verify in writing that it had the authority to replenish an account that mf global u.k. had overdrawn. j. p. morgan sent three drafts of that letter asking mf global to confirm the transfer. is that correct? >> yes. >> did anyone at mf global refused to sign a letter?

>> no discussions with me. no. >> were you told anybody at mf global refused to sign a letter? >> no, i was not. >> you have no information of anybody and mf global refusing to sign the letter? >> you have to focus on which version of the letter. >> any of the letters. >> the first letter was -- was asking what individual to confirmed that everything that has ever been done in the history of those accounts and everything that would ever be done in the future was in compliance with cftc rules. you conveyed it was a hectic time. no one individual as far as i know, this is not an area that are was directly involved with but no one individual did be making those transfers. my understanding is j. p. morgan confirmed ever interested in two transfers and two related transfers. that is what they perceive

insurance is on. a recent inquiry, the letter was limited to that and we are able to make that. i understood the importance of getting something to them quickly deplete chris will getting them comfortable and ask them to get back what they needed and we would get a signed. >> did you tell ms. o'brien about a letter being sent? >> i folded a copy of the letter to eat if o'brien. >> did you tell her it needed to be signed? >> that was the substance of our conversation. >> what was her response? >> to be point i discussed it with her, j. p. morgan, understood their focus was on those two transactions and mike weir understanding from speaking to miss o'brien is if they wanted those transactions she would sign it. >> thank the gentleman. mr. lynch is recognized for five minute. >> miss ferber leaders and how

important is it for your firm for mf global to protect client funds? >> critical obligation of any f c m. >> miss serwinski, how important is it you protect client funds? is that a career for responsibility? how would you classify it. >> a critical and important. >> mr. steenkamp? >> a critical objective of the firm. >> this was a central core responsibility. this is not some esoteric will. this is not some accounting error. this is central. this goes to the very trust that your firm relies upon. the whole market relied upon in order to function. we have $1.6 billion of customer money take a walk and none of you know anything about it. none of you are aware of it. this is not a small amount of

money. $1.6 billion in money that was entrusted to you and the whole reason for a segregated account is to protect the client's money. it is absolutely disgraceful. utterly disgraceful what has happened here. it is disgraceful that you sit there and say we do nothing about it. i was on vacation. i was in chicago. i was in new york. i was doing the global thing. is not believable. i've got to tell you it is not believable at all up here. it is utterly disgraceful. it is disgraceful not only for mf global but anybody in your industry because it is such a central principle in protecting clients and hard-working farmers and grain operators, families that invested their savings, their hard earned life-saving

less and they trust you and this industry is supposed to protect their interests and they were robbed. they were robbed and nobody knew anything about it. $1.6 billion. let me ask you under cftc rule 1.23 it commits the firm. this is a problem. we got to look at the regulations at some point. it permits a firm to add its own funds to customer segregated accounts. i understand the practice. of the attack your firm funds you put in there and you coaming will segregated fund with the not segregated you had firm funds. how do you tag those funds? >> i think an accounting question and i would defer to my

colleagues on that. it is fairly ingrained. >> you don't know. central responsibility in protecting customer funds you don't know. >>, were tagged in the bank account, i do not know. customer funds need to be kept in the bank account as customer segregated fund accounts. >> miss serwinski bling crystal steenkamp leaders of any idea on this? if will 122-3 allows the firm to comingle funds bloggers will put a buffer in there in that account along with customer funds better segregated, so-called how do you tag the firm's funds and distinguish them from customer segregated funds? ms. serwinski? >> if i may take an opportunity to try to explain segregation and secure funds. >> how about you just answer my question? judging on your other responses

sins i sat down here some time ago, miss o'brien's declaration of the fifth amendment was more helpful to this committee that any of your answers. i don't what you going off on any long explanation. based on everything else that has come out of your mouth, there has been nothing that has adopted the responsibility for any of the stuff that has gone on even though you are all three in major positions of responsibility. so please answer the question that i asked. how do you attack the firm's funds and keep them separate from these customers segregated funds in the same account? >> one firm's collateral is deposited in to the segregated or secured environment, they become coming gold with -- coming gold with the funds.

>> it is indistinguishable. just a balance. >> there's no ability to distinguish one asset from another. >> we track the firm's investment in the secured funds on a daily basis. >> if you had to sell securities out of that fund you could take either securities out of -- that were placed by customers or take securities out based on the company's deposits. i am trying to figure out a way to prevent this happening again. >> i understand, sir. >> i think there's a loophole

here that there should be -- this is a situation where the regulation that is in place has not protected these people, these grain operators and these farmers from having a one$.6 billion stolen out their account. i think somebody in your term, somebody in the industry should recommend a better method of protecting them that exists right now. i realize i am over on my time and yield back. >> i thank the gentleman. the gentleman from new mexico, mr. pierce. >> miss ferber, i heard -- client for robb. is that inappropriate term? >> i -- >> yes or no. >> i think it is -- i don't know

how to describe it. [talking over each other] >> the money is not there. they put the money there and they can't get it back. does that fit the definition of stolen or robbed? this is magnificent. one of the highest paid lawyers in the country. bonnie and clyde were chumps. they drove around the use gas money. you guys have people send things electronically to you and nobody is responsible and you can't even declared that it was robbed or stolen from. what jumps the old-style bandits were. miss serwinski, you seem alarmed when you came back to the office that these funds were taken. why were you alarmed? we have gone through the 24 hours leaguer to wednesday, it didn't reconcile and why were

you alarmed? you with distressed? >> when -- >> press the mike. >> i was not alarmed -- >> you said you were distressed. you wouldn't have done it. why would you not have done that? why would you not approve that? >> based on the previous day's information -- >> that is what i am getting at -- is it right to take that money and not pay it back by the end of the day? is it illegal? >> if it was utilizing customer funds -- >> is it illegal to hold it over night? is it illegal to hold it for a year? is it illegal to take customer funds and shore up the sinking ship and use them for a year? >> i don't know what was done.

>> i didn't say -- i'm not accusing you of what was done. you just said -- you found it alarming or whatever word you used. >> i believe i said if i was presented with the request to approve $175 million interest -- >> we missed the deadline to pay it back. that is your testimony. we missed the deadline. what was the deadline. what is it a legal deadline? what deadline? miss ferber doesn't know it is stealing or not. >> i understand we're talking about two different items. my reference in the written testimony was with respect to the deadline being missed on the wednesday for the repayment of intracompany intraday loans is what i was concerned about thursday that had been brought

to my attention. those intraday loans that were not paid back by the end of the day did not violate -- the firm was in regulatory compliance at the end of wednesday. was an internal policy to ensure that the firm invested in excess segregation and secured funds. >> there is no external prohibition against using segregated funds? >> segregated and secure -- >> no external prohibition? >> not that i am aware of. >> so it is against the law for 75 years so mr. royce's testimony is incorrect. you have those funds. you have taken them and what you are telling me is $1.6 billion is still not against the law. you did what was fair and square. is that right, mr. steenkamp? fair and square. i'm hearing the of the two witnesses say it is fine, it is

okay. is it ok? >> not knowing what happened is impossible -- >> you took the money and are supposed to get it back. if they put money in the bank and if i can't get money back from the bank then the bank has taken it from me. i can get my money back then the bank has taken it. they put the money with you, put their money with you and can't get it back. so the is that right or wrong? morally right or morally wrong? your legal counsel obviously can't declared against the law or nothing like that. so tell me. ..

the legality or illegality about it. i think that is the message now that's going out today. i think mr. capuano said it fine, shame on you. thank you. i yield back. >> i thank the gentleman and not like gentleman from california ms. waters is recognized for five minutes. >> thank you, mr. sherman. i'd was just talking with the staff here about some of the accounts that i've read in the newspaper where there has been some attempt to describe accounts, customer accounts as opposed to other accounts, and i suppose what i'm hearing is was kept in the same account the

client money had been taken out and put in another account, and then the money was taken from that account to pay overdraft, and when he asked about where it came from someone was able to see the came from an account other than the client account. so let me ask you know anything about another account where the client money was paced prior to the payout from that account to take care of the address to the rear of wasn't involved in any of those transfers, so i had not known about the details of those

movements. >> do you know about the details of what accounts are official accounts of the company can, one, two, three, four, five, ten, 15, do you know that much? >> there were obviously accounts that were held in the holding company those accounts are very different than the separate accounts that i held in each of the regulated entities, and in my role that wasn't in the detail of those accounts which were managed by the senior professionals we had in each of the word regulated entities because each is different so there's very specific and specialized rules apply to each country. >> okay as the cfo of mnf global, you find 302 and - six certifications that test into the internal controls of the global corporation over quantity every year at and the certifications are accurate.

to convey civil and criminal penalties. with that, my question is are you confident that your internal controls were adequate at the time that you find them at the year ending quite a period? the quarter end? >> redican the cfo in april 2011, so the year and as you mentioned as well as the first quarter thereafter as part of finding the controls which are a snapshot of the point in time to go through a lot of review, sob certification etc overall with the controls across the world. door certifications are accurate and you know that they are not you could face civil and criminal penalties, so with that my question is.

you're internal controls are adequate at this time that you find them and at the year and in each quarter. you felt good about your signature. >> my last sign-off flaws in june and nothing came to my attention at that point in time that indicated that i shouldn't sign that. >> so, what you are telling us is that you were not confident that there were internal controls adequate at the time that you signed them at the year end in each quarter. >> no, ma'am, nothing came to my attention as of june when i signed the certification that indicated there were any issues with internal control. >> when you're confident? >> at the time of my signing nothing came to my attention to indicate otherwise. estimate a lot has been paid to the attention of why the waterhouse coopers gave the

company a claim report that me and internal controls turned out to be compromised and for them to lose 1.6 million of customer funds to the best of your knowledge of the ennis global internal control as they relate to the segregation of customer accounts from of the firm. >> it is a broader period of time. i would say that we worked closely with the pwc and they pay their own controls. it's the best of my memory. nothing came up during my time that indicated an issue with of the segregation of the client money. so, basically, the price waterhouse coopers gave the company a clean report in may when the internal controls turned out to be compromised enough to lose 1.6 billion. do you think that price

waterhouse was incompetent in doing that that they should take some responsibility for that? >> i can't comment on the independent review that pwc who does. they didn't raise any concerns to the best of my memory. >> but do you not have to have confidence in the auditor? >> you have to feel that your auditor is competent and acting properly come and that you have no reason to question them. >> they perform their own independent assessment of the controls and reach their own independent conclusion. >> i thank the gentle woman and now the gentleman from florida

is recognized for five minutes. >> thank you, mr. chairman. these are going to be easy questions. when we had the opportunity to question mr. corzine i was shocked he hadn't apparently been interviewed by the department of justice or any other authorities and so i just wonder if have you been interviewed by the fbi, department of justice or any other federal investigators? >> my lawyers have dealt with all different regulatory agencies and investigative offices at the moment. spec i don't know if you're mumbling or if i don't hear good but is that a yes or no? >> to my lawyers suggest. estimate you haven't had a face-to-face talk with any investigators yet? >> i have not, though. >> i have. >> talk to them face-to-face?

>> yes, i have. >> how long ago? >> i spoken to them twice. >> what do you think was the most compelling question our line of questions they had? >> i don't -- there's a lot of questions and a lot of topics discussed. i can't think of one of the top of my head that is more compelling than another. >> i am cooperating with the department of justice and i am scheduled to meet with them on april 6th. >> have any have you been offered? >> of. >> let the record show all three said no. deutsch indicated you felt the investors should get the money that. where do you think the odds are for the investors to get their money back? >> i have no basis to answer that.

>> ms. serwinski? >> i don't know. it depends on whether or not -- >> mr. steenkamp? >> it's still too early in the bankruptcy process and that is why we are there to work and maximize it. >> investor's losing money from an account that was supposed to be segregated? >> because i don't know what actually happened it's hard to answer that question. >> ms. serwinski? >> could you repeat the question? >> obviously there was a terrible failure here of some kind, but what it was i don't know since the trustee has control of the investigation all information since october 31. >> a good analogy is a gambler

at the casino and if the casino doesn't provide more credit once the gambler's chips are gone he has to stop playing. he can't just reached over the table and take some of the else's chips. if he did commission would be in handcuffs quicker than you can say segregated account. isn't that what happened at ns global? >> i don't know what happened, sir. stomach ms. serwinski? >> i don't know. >> i don't know. >> to be the experts a company decides the scope of mf global, there is one helluva lot you don't know.

>> is their anything else that you might know they might want to share with us to give more insight? >> i'm happy to address any questions, that's extraordinarily broad. >> take a shot at it. >> not sure where to start. >> we are talking about what happened over a very few days in an area that was handled by serious health professionals, well staffed segregated rules, you know, deeply within the finance, not the treasury and operations groups in chicago. i share your frustration and that only what happened but again, we learned about this hours before the of bankruptcy filing. you may have more accurate information than we do but i

share that frustration, and as i've done my entire career i would have wanted to die is an on the first moment of learning that there was a problem and understand it and do everything i could but we have been cut off from that information. >> were any of you contacted by the cftc in their investigation? >> the cftc was at the meetings i attended with of the department of justice. >> outside of that were you contacted by them? >> on occasion after october 31st i had -- there were representatives and our offices. >> what you have any idea why the cftc would have been asked to cease-and-desist their own investigations? >> i do not, sir. >> i'm not aware that they were. >> thank you mr. chairman i yield that. >> i thank the gentleman and now

the gentleman from new york is recognized for five minutes. >> thank you, mr. chairman. here we have three intelligent and able people who were in positions of tremendous authority and responsibility of a firm that was handling, that should have been handling with all degrees of integrity and trust the hard-earned money of the farmers and ranchers and other clients who depend on you to do the right thing, and among all of you with no disrespect meant, and ms. o'brien who is conspicuous in her absence, it seems that there has been a great effort to maintain plausible deniability. that's certainly the impression that one is left with in your

written statement come to note that as of wednesday, october 26, you received a call from a representative that informed you the sec wanted to to meet with management and putting liquidity and funding and that the cftc will also attend and focus on segregated funds calculations. now that presumably would have triggered a question. you are a highly capable person. you are in a very responsible -- does that trigger a question in your mind whether or not there was a problem with the segregated funds? >> we would make sure that we have the right people there to discuss the status of the segregated fund come and that is exactly what we did, a symbol for the detailed meeting that

day. >> but the -- you didn't, the firm didn't inform the regulators as far as i can tell of the deficiency, the shortages until early monday morning, correct, ms. serwinski, according to your testimony? >> there was no regulatory deficiency that i was aware of until that sunday evening. >> but it sounds as if there was an insufficient level of communication between your department and yours, ms. serwinski. is that in the heat of everything that was going on? i mean i would think that the top-level at a firm like this which is clearly falling down around your years practically, yet you say that in your testimony you were heavily involved in trying to sell mf

global. would that not to an outside observer suggest that you were endeavoring that as vigorously as you could to make sure that the potential wasn't alarmed by what would have been an over to violation of everything a firm like mf global should be doing on behalf of their customers and the law itself. >> let me be very clearly was never aware in the period that you were describing or any time up until very late sunday night or monday morning that there were any issues regarding the segregated funds to read to me get free career we were frequently updating the regulators that included treasury colleagues that were directly involved in those areas and those of states treat as we now know they were in our offices during the review on thursday and friday, the regulators were in our offices through the weekend and there was every effort at least in

terms of myself and everybody i encountered to be transparent with other regulators. >> were you out of the united states when these things were occurring just out of curiosity? >> no, i was not. ceramica certainly would seem to me that, again, if you were trying to stave off the inevitable when someone who knew and someone had to know, mr. corzine would assume there was very bad news coming, wouldn't it be in the company's best interest in terms of trying to salvage itself that they would keep as many of you silo as possible so to speak? it sounds as if there was a profound failure of communication within the company itself that you don't know what happened and that you're in this position now. should the american consumer,

should the american investor, the farmers and ranchers be concerned that there are other firms like mf global that operate in the same way? does your experience lead you to express any concern in that regard? should we be worried? >> i think once we know what actually happened, what went wrong then we would be able to answer that question. >> mr. chairman, i yield back. >> you are recognized for five minutes. >> thank you, mr. chairman. mr. steenkamp i'm going to go back to internal controls because we may not know the specifics but what you agreed you are a cpa and worked for price waterhouse to define a cpa and i understand internal

control. you would admit that for this to occur there had to be a breakdown of internal control. you have to admit that, correct, yes or no? >> yes or no? >> anytime you have lots of money, you have a situation like this there has to be a breakdown in the internal control, correct? >> i don't disagree that something obviously went wrong. spinnaker was the internal control because the internal controls how you stop this from occurring wouldn't you agree? >> that could potentially have been what went wrong. >> i'm going to go back to a follow-up on some of the questions ms. walters asked, but price waterhouse identified the management override of internal controls as they list mf global in the papers produced in 2011. are you aware of that? >> i can't recall that.

>> i actually have to work paper here that shows that they identified through the company and you were not aware there was significant concern because of the oversight of the internal controls they brought that to the attention of the company. >> many discussions are held on of various controls. there's 100 controls that operate in the firm said there are many discussions. we ask for any documents to be provided ahead of time for us to have a look and unfortunately we didn't get. >> your answers are going around in circles and that is the problem i think most of the colleagues here are having. mf global chief executive officer john corzine stated in his testimony that he managed the european sovereign debt repurchased to the maturity portfolio.

would this hands on action by the ceo be some type of -- wouldn't it be something they were cautioning? willson this with a talking about? >> welcome sir, again, i'm not sure whether that was controlled for the inquiry and the other entity or whether it was for the global but it was referring to but just as a general point i would say that any actions would still have to fall in the framework that exists that the regulated entity. some give they say they can do anything he wants and nobody can stop him that isn't a very good internal control and i can fit when he was here the only person that could stop him was the board. he could override any body of the board. would you agree that was the case? >> i have no memory of any comment like that of the top of my head. >> he did testify that but i'm saying were you aware he could make any decisions he wanted and the only person that could override, it's an internal

control feature. you are the cfo. it's shocking that you're sitting here -- >> i'm not aware of a control such as that. estimate your not aware of internal controls like that? >> i'm not aware of a control that can override the actions. >> would that be a breakdown in the internal control in your eyes as a cpa and somebody that worked for price waterhouse would that be a breakdown of internal control if the ceo could actually make decisions like that without any bundles overriding it? estimate any other company. spaghetti could override any internal controls i would agree with you. they could be mitigating controls in place further down. >> the question is will that be a problem of internal controls? >> if that is the control. >> it doesn't matter what company it is.

i edited and you stated the capitol on liquidity has never been stronger and that mf global was in its strongest position ever as a public entity. how can this be when one week later the parent company filed for chapter 11 bankruptcy? >> that e-mail and comment was made early on monday morning on the 24th and it's reflected the capital and liquidity. >> you are the cfo of the company. it was really shocking. i've been a businessman my whole life. i would never be allowed to answer questions when you're answering them. you are the cfo. we are talking about liquidity, we're talking about the strong corporate position and you're testifying a week before that it's stronger than ever and its files bankruptcy one week later? >> that comment was made before any of the downgrade that took place and it reflected the cash position of the successful capital leases with their cash

still in hand. >> this was october 22nd. again, it amazes me as a cfo, any company that i would not know we are in trouble in the position you are in. i'm sorry, but again, i am a cpa and all but a major global companies. i am totally shocked that he would sit here and say that you believed was in the strongest position it could be a week before it filed a bankruptcy chris dhaka was prior to any downgrade. islamic you should know. you are inside the company. i'm running out of time. i'm sorry. i yield back to this amici thank the gentleman and down the gentleman from texas is recognized. >> thank you, mr. sherman. >> let me back up little bit at all upon some questions that mr. fitzpatrick offered and this is the october 28 jpmorgan

request two mf global to certify and confirm the fund is being sent or not customer assets. how many iterations of the letters did you get? >> three. >> and why? >> when i was last to take a look at the certificate i was asked to call jpmorgan and understand what they were focused on and try to get them with the needed. in the first call date indicated very specifically the related transfers they were focused on and that is what they were seeking assurances on. as i tried to explain before the certificate was extraordinary broad and nothing one individual could quickly signed it into a reasonable inquiry and potentially. >> so it is your opinion that it

was too broad and couldn't be signed. did you discuss it with anybody else? >> as broad and quickly addressed with the needed and they were very clear that what they needed was relating to the transactions. >> did you speak to anybody about those letters? >> i spoke to edith o'brien about the transfers jpmorgan was focused on. she provided me with copies of the transaction report and they matched what jpmorgan described to become and again, my very clear understanding was that if the compliance was limited to those transactions, those transfers, she would be able to sign that. >> did she expressed to you any kind of concern about whether she should sign it or not? >> not as it related to those transfers to the estimate were there any other transfers she was concerned about? >> we didn't discuss others the

compliance is that it asks one individual who, you know, probably involve some transfers and not others to say that everything that has ever been done on those accounts to any time in the future was incompliant. the focus was jpmorgan needs comfort right now let's give them comfort on with the need. >> did she ultimately sign any of those letters? >> i understand that she did not. >> do you know why? >> no i don't. >> did you ever talked to mr. corzine about these letters? >> only when he asked me to take a look at it and he may have said you called jpmorgan yet that was my on a conversation about. sec'y what mf global not be able to certify that firm hadn't used customer funds october 28 and wouldn't use them in the future? >> the certification is a bit broader than that and it is

every transfer with all the cftc rules. i certainly expect we would be able to make that with time and and something we would have to go back and make a reasonable inquiry and should be able to make that representation, not one individual sitting there that day. >> pardon me for interrupting barn these forms they sent out from jpmorgan or any other house, aren't those normal forms? arn those standard? >> i'd never seen one before like that and in my general experience to make a representation today that everything they might do in the future is in accordance with certain rules is not so appropriate to review could say i have procedures in place to assure them. >> were you not concerned about their concern? >> they didn't express the concern. they said they saw these transactions and because of

certain compliance procedures they have in place because of their own history or experience that they were inquiring about those. this is somebody that i had tremendous respect for the and new the futures industry have great respect for her and she's a person i would rely on with regard to the rule 125 to the estimates don't run the clock on me, please i have three little time to the sunday october 40 if you were copied on an internal mf global email what 4:27 m which one employee asked another whether it was permissible to send a statement that showed a $952 million deficiency. why would the employees hesitate to share such a vital information with their regulation with the regulator? >> i'm not aware that they would

be hesitant in fact they were in our offices in new york working with those people in chicago. if you think this is the calculation of these complex times and all you would let people know that to the people said yes in the report. >> seven you instructed employees to release the information? >> i did not but if i recall correctly if i'm recalling the e-mail you are referring to somebody else could easily >> before i run out of time with mr. steenkamp, on what date did their begin to be a shortfall and not customer segregated funds at mf global? >> sir, i have no memory knowing

about any shortfall prior to sunday. sunday if we found out that there was a shortfall and originally we had heard that the shortfall was for the friday but that it might have been further sales as well that might be an accounting error and we were finding out it was just so unbelievable there could be a shortfall and everyone was under the impression there was some accounting reconciliation that just wasn't working and that was causing it and that's why as you have heard in the testimony there was the big question to work together to try to resolve that. estimate your ultimately we're especially with the trustee that the shortfall began on october 26th is that correct? >> i don't work for the -- >> you are aware october 26 the being of the day of the shortfall. >> i've been reading in the papers -- >> are you aware or are you not

aware the 26th of october being the shortfall date? from whatever source? the shortfall began october 26 and groome until the company went bankrupt on the 31st is that correct? >> i don't have that knowledge. ischemic my time is way over. >> i thank the gentleman from california you are recognized for five minutes. >> thank you, mr. chairman. did you have the opportunity to speak prior to declaring bankruptcy? >> in your opinion were his priorities protecting customer

funds or making sure the company was sold to the interdealer brokers cracks >> my conversations with mr. eve ensler were related to the two topics to read he was very focused on the customer funds, and he, along with his colleagues wanted an update on where we were in concluding the sale. >> let me also ask you to your knowledge was mr. corzine in contact with mr. chancellor prior to declaring bankruptcy? >> i assume you're talking about in those last days. >> prior to bankruptcy to the estimate i am not aware that they had any discussions. >> so there wasn't any conversation she had with you about his conversations with mr. demler? >> that is correct to the best of my recollection.

he may or may not have been. i'm not sure, on a call with a large number of regulators being updated. was a call at 2:00 with many regulators coming and i do not know if he was on that call. >> let me ask you another question. if we go back to june of 2011, finra was concerned about the european debt exposure, and directed mf global to increase its capital requirements. did you agree with the directive on that score? >> to the time frame my understanding, and i wasn't involved in the early conversations, but over a period of time, probably starting in june or early july, finra had

with of the firm about their view of the appropriate capital treatment for some of our positions and those conversations ultimately led to their determination i believe quite late in august of 2011 that had different capital treatment appropriate. >> then let me ask you this. did john corzine agreed the time, he probably didn't because he flew to d.c. to meet with the sec, to set them to overrule, correct? >> i should say that my accounting colleagues hour outside counsel. price waterhouse cooper all disagree to my knowledge with the appropriate capital treatment to this position under the rules as they were written,

suggest the firm did make a determination and to some extent, it was a topic there should be made indirectly with the sec on something so important. >> let me go to another question which is interesting. ms. serwinski testified that she would not have approved the 170,000 transfer on october 28th to cover mf global's over a draft. do you remember that? and do you find it interesting that mf global blew past the same capital requirements that jon corzine lobbied for cracks

>> first as i recall the testimony it was basically on certain assumed facts if there was a concern that it violated certain rules then she wouldn't approve the transaction. i'm not sure that it violated the rule that mr. corzine lobbied against. i need a little help understanding the question. i'm glad to address it. >> well, my time is expired but i want to thank you for your testimony here today. appreciate it. >> i thank the gentleman. we are going to have a little bit of a follow-up hearing but what i want to do because i feel we have kind of dance around this issue a little bit, that this is a glass of water and i hope you can see that a black line. can you see that there? this is the segregated account

so the segregated account, all of the water below the line as to the customers and all of the water above the line so that is a legal common practice for the company to keep access company funds in the segregated account is that correct? >> you sometimes have company funds in the segregated account, right? this is not rocket science. so this is the company account, and so this here is what it would take to get the company back from being overdrawn. the only way the customers lose money is when you pour, you take some of the company's money out and as long as you are the line your income plans, is that correct? when you do this though, are you in compliance?

no. so the only way customers can lose money is when you take their money and put it in the company's money or somewhere else. is the right? and what you're supposed to do is if you take money out and borrowed, you're supposed to securitized it. so theoretically, if this hasn't gotten water and it's got collateral, is that correct? so now we have that clear. everybody understands that money was lost because money was taken out of the segregated account that belonged to the farmers and ranchers and investors, right? does anybody disagree? >> how else does the money get out of you want to get out cracks. can you tell me how the other way customers lose their money in other than money being taken out?

estimate the way they could be losing money on their trade. estimate it would go down proportionately. >> mr. steenkamp, a lot of back to -- are you familiar with mr. rosen and mr. stockman? >> yes, they were the chief risk officers. >> were you aware that they need both of those made recommendations that the repo to the maturity and foreign sovereign debt or the potential risk to the company. >> there were in the murders and many discussions between the board and mr. corzine and the chief risk officer around the risk limits and parameters. some are you aware of a document

called break the glass was put together by the firm? >> i am to be a >> who prepared the document? >> there was a working group put together in the firm. >> who was in that? >> members of treasury, members of finance, members of risk, treasury operations. because that was like a scenario analysis type of document and so it required the input to the estimate did you participate in that? >> i did, yes. >> and there was some wind you put the document to get there? >> via original request for the document was made in august i believe by the war. >> and was completed when? >> it was presented to the board sometime around about the middle of october. >> did you kind of break the glass scenario and finished at 14 days before you depart bankruptcy? >> it's very prudent and common

to have a document like this i call firms do it and the initiation was many months prior. >> do you disagree with any analogy i made that the only way the customers would have lost money is if people took money out of that account and didn't put it back, yes or no? this is going to be yes or no pity we aren't going to accept. the only customers lose money if they lose money on their positions but if you met their positions the only way the customer has lost over a billion dollars is if somebody took more money out than they were supposed to, yes or no? yes or no? >> i'm not an expert on that to be able to know whether there is. >> i'm not talking about what happened. i just want to get some definitive answer here. under the way that full of praise the only way someone can lose money is from a customer other than his net position is

that money is taken out of the account that shouldn't have been taken out, yes or no? >> i don't have enough knowledge to be able to answer that. i am appalled that you can't answer a simple question like that. i think that you are not being honest with this panel to read >> the only way the customers that their positions if they take money out of the account and not put it back. >> there is a permissible secure calculation. >> there would have to be collateral. >> of the secure calculations rules allow and permit is a client gave the firm $100 under the secured role there's an alternative method available the does require, or can require less than at $100 to be required to be maintained in the secure

environment. >> but i'm just talking about if this was the money that belonged to customers and you part of all-out, that's the way you lose money, right? >> yes. >> thank you. >> this is the way you lose money for customers, right, you took money out that shouldn't have been taken out? >> with the exception of what was described, yes, you still have an obligation to return the customer funds and i agree with you. >> and so, what happened on monday declared bankruptcy was nobody to the money back, did they? >> not to my knowledge to the estimates are there any members that want to have a follow-up to this panel? >> mr. steenkamp, i'm sorry, i

was looking through mike peters, and i can't find your resume. where did you get your education? >> i'm from south africa, so my graduate degree and postgraduate in accounting in johannesburg. >> accounting? what kind of a great point did you grudge with? and just more or less. >> it works different in different percentages, so i probably have my average around 78%. how many hours of accounting did you have? >> i don't know off the top of my head. it was for years, three years to graduate and one year postgraduate. and cpa equivalent. >> just trying to establish what to do in the past but you don't remember some real, real big significant things from less than six months ago. i am just trying to bring that to the attention of the public that's watching today because they are wondering who the hell

was in charge of all these companies appear. ms. serwinski, when a given over jim we've tiffin to those segregated fund is like the water poured out of the glass and bits of secure, is there a requirement to notify someone? who would have to be notified? >> the regulators would have to be notified. >> nobody inside the institution? >> they would be notified that -- the requirement, the regulatory requirement is -- >> you didn't have an internal process the would say to, which is kind of messed up here. we don't do it again on the assistant treasurer i think is we ascertained earlier could have made those calls come see you have a couple people and maybe they have authorized did and into those funds in the

little plastic glass. so who would they have to notify what poor the funds out here? >> there would have been a process whereby the situation would have been escalated at released the committee to rectify what ever contributing factor that led to -- >> there was somebody to notify? >> yes. >> so we didn't of those funds and securities them and we are supposed to return them by the end of the day or something to balance of the accounts and all that jazz and we didn't do that. so, at what level does it -- did you ever discuss what level it should go?

these guys are the umbrella, so if we are doing things that take people's money away without losing it, if you lose it fair and square, that's fine, but if they take the will of the sheep and selling it -- at what level should you have notified because you are out and i understand. at what level should mr. steenkamp has been notified because now we are dealing with issues that somebody's going to have to answer questions someday so clearly you all have discussed that. is there a level? >> once the numbers were confirmed to reach the deficit i believe they were confirmed. >> once it was confirmed that the $900 million wasn't true and -- >> was 900 the threshold? >> 1 dollar would have been the threshold, sir. >> so you got back on thursday

and nobody had been notified anybody? everybody just said okay and mr. steenkamp said in his testimony i was a heavy, i didn't much care for doing that. surely there was some sequence that somebody was to supposed to say you are saying that never rose to your attention and wasn't your concern. at what point would you be concerned with missing customer accounts? >> i would be concerned with any missing customer funds. >> so she found that on wednesday. she says give it an or maybe don't have it collateralized but those on wednesday or thursday it became evident. >> excuse me, sir. i don't believe i said that. it was and regulatory compliance to the best of my knowledge. >> so you're saying we did it all on saturday night.

if you are saying there was no built up over time. >> what i am saying is a was and regulatory compliance with the excess segregated secure rolls on till i was aware on sunday night that we were not in compliance on friday. >> so you think -- thanks, mr. chairman. >> thank you, members. this will be the last one. >> thank you, mr. chairman pete i appreciate you actually trying to help us unravel some of this. you're the only one that's answered questions beyond yes or no or i don't know, mostly i don't know. we appreciate your willingness to more than dodge questions. mr. steenkamp, is it correct that your work now consists primarily of making assets available? >> one of top priorities for the benefit of customers?

>> i don't know how the -- i mean i don't know -- >> do they go to the creditors? you don't know that either. you'd know if any of the assets would read as a potential pool of assets available to pay back customers? tavis for the trustee to determine. >> you have no idea? you absolutely have no idea? under 02 have no idea what i'm talking about? >> no, sir, i believe the chapter 11 trustee is of the holding company so it works with the creditors, but i am not sure how that process works and i am allocating that among the firm. >> did you recently proposed paying and others substantial bonuses for helping recover assets? >> there has been one discussion. but no bonuses have been proposed as of yet or it would be finalized. >> do you believe you deserve a

bonus? >> i believe for all the hard work we are doing, we're just asking to be fairly compensated. we are not a part of the discussion and whether that includes bonuses or not compensated in the future but not for the humongous losses that you know are comparable. would you accept bonuses if the motions are approved by the bankruptcy court? stomach if they determine that is fair and reasonable compensation to this gimmick because it was all brokenhearted you are over the losses suffered by these investors. how will the customers do with the idea using money that could potentially be used to reimburse them for the money stolen from their segregated accounts under the watch of you and others to pay for the bonus and the legal fees of the people were running a company that luted the accounts? >> i'm sure the customers of all of their money returned. estimate are you familiar with a term called willful blindness?

as a term used when an individual seeks to avoid similar criminal liability for the deily could potentially putting themselves in a position where he plans to be aware that would render him liable. >> i'm not specifically aware, nope. >> do you have any idea whether that applies in this case or not? >> i would assume if one takes the fifth for example concerned about. >> missed herber, who was involved to put mf global in the liquidation? >> the -- let me make it shorter. anyone from the sec, cftc or the representing creditors or trading counterparts? >> the sec would have been involved only one cannot files themselves.

i believe it is the sec that has to take the application or do that. i believe was a period of might the regulators were in deep conversations among themselves. was the sec involved? >> he organized the conference call where we asked to notify the regulators early in the morning on the 31st. >> who was involved in placing the holding company in chapter chapter 11 of lalinde assets to flow to the creditors and countries? >> the board made the determination that the company would file for bankruptcy to respect the board and anyone in particular on the board? >> the board of directors. >> okay yield back. >> i thank the gentleman and the panel and at this time you were dismissed and we will call it the second panel. thank you for coming.

>> mf global filed for bankruptcy protection october 31st this week to end a features a documentary about hubert

humphrey. producer mick caouette c-span: when did you first think about doing a documentary of hubert humphrey? >> guest: it would have been the late fall of 1999. i was working at the minnesota historical society. and i ran across the country collection which is just enormous. this will hundred manuscript boxes, large minister to boxes, 10,000 films, 10,000 photographs, 5,000 audio tapes, and i started a documentary work earlier, maybe three weeks earlier and what was no one lummis? it was a gold mine of material. then i learned more about him. i grew up in minneapolis, he is part of my childhood but i didn't know about him and he was kind of forgotten in minnesota but all the material just, you

know, was delete kutz releases that's why started. as i dug into it, it was wonderful. c-span: who was he? >> guest: who was he? use more of a humanitarian than a politician frankly. he used politics as a religion, he wanted to be a creature and saw it as a better people than church and that's how he used politics. c-span: 25 years in the senate? >> guest: i believe it was 25, may be closer to 30 because he had five terms, could be 25 khator right. c-span: four years as vice president. how many years was he the mayor? >> guest: vautrinot to be about three. he was elected to a second term but then he became senator. c-span: how long do you know him? >> guest: never met him. c-span: >> guest: just about everybody i know has met him but i never had. c-span: so how long did it take you to the documentary and where did air first? >> guest: it took a long time. i started first the university

in 2000, and then really until 2010. and it was a long process, not such as making the film but raising money and all that sort of thing. we interviewed 52 people in ten cities, as we had 120 hours of interviews. as a long process, and i had another short stint at a pbs station that didn't go well and lasted two years. i said forget it and bought an ad and edited the film myself with another guy. c-span: your and it did this film with a mac? what's schoeppel from the documentary. what did you name it and where did you get the name? >> guest: it can from what he believed and i don't know if he ever said it did believe that it was possible, anything could happen in the system. c-span: the happy warrior. let's watch a couple minutes and then continue. >> country and his supporters arrived in the hall on the final day of the