mr. conoway. >> ms. sommers, mr. koback, thank you for being here. ms. sommers, when you get these daily reports, with respect to the segregated accounts, you never expect to get one that shows any breach of segregation. is that the norm? >> we do not normally get daily segregation records. >> but if you got them, you would normally see them to be clear that the segregated funds are there? >> absolutely. >> you're relying on the integrity of management and the employees of the fcm to report -- to prepare the reports properly? >> they are required to report to us if they are under segregation, and that has happened. >> so when you get a statement, and then the company itself was relying on thursday integrity of the management and the employees there and the requirements, i assume yours, that internal control systems and management systems be in place that drives information to management that is accurate and timely in particular with respect to this segregated deal? >> absolutely. >> of that did not happen, and the reports do not reflect the underlying act

mr. berkovitz, commissioner sommers told the senate ag committee on we have a very good idea at this point what happened to the money. what happened? >> congressman, i think what commissioner sommers was referring to was we have a very good idea of the initial transfer out of the segregation accounts. we have a lot of information about a nation where that money went within the company. what we are continuing to look at come we are continuing to examine is what was finish of the transaction from what was the underlying purpose of those transactions, to what extent with a legitimate transaction, to what extent would it not legitimate transactions. and then from there what happened to those funds. several other steps that we are looking at very, very closely to try to trace exactly where all that money went. >> was there one particular entity they got a line share of those transfers in the last days, our? >> i can't speak to that. that's where we are continuing to try to trace these funds, and that's not going -- that's an ongoing process. but we are, that is one of the questions we're trying

mr. chairman. ms. sommers if i understand your answer to the chairman's question, the cftc was receiving daily reports from the fcm that indicated no problem at mf global? >> daily segregation reports. >> when was the last cftc audit at mf global and what did that audit show? >> the cftc is not the frontline regulator for fcm's so we did not perform audits on fcm's. we do spot checks and other different procedures to review books and records that the audits are performed by the dsr's. >> are you aware of the results of the last one, what showed? >> cft staff would have those. >> you don't have personal knowledge do you? >> i do not. >> hope closely does the cftc monitor -- >> i'm sorry? how often? >> not how often, how closely? does he get a lot of attention? >> for an entity that is fcm solely, those types of capital levels would be part of our oversight for in fcm, i'm sorry, for an entity that would be a a broker-dealer fcm. then those capital levels would be reviewed by either the security side or the futu

mr. berkovitz, commissioner sommers told the senate ag committee on tuesday, we have a very good idea at what commissioner sommers was referring to was we have a very good idea of additional transfers out of the segregation accounts. we have a lot of information about initially where that money went within the company. but we are continuing to look at, what we are continuing to examine is what was the nature of those transactions, what was the underlying purpose of those transactions, to what extent would a legitimate transactions, to what extent were they not legitimate transactions and then from there, what happens to those funds? so there are several other steps that we are looking at very very closely to try and trace exactly where all that money went. >> was there one particular entity that got a lion's share of those transfers in the last days or the hour? >> i can't speak to that. we are trying to continue to find these funds and that is an ongoing process and i can't speak to part of our investigation but that is one of the questions we are trying to figure out. >> thank you. mr.

mr. corzine was aware of the loans being made on the segregated accounts. >> ms. sommers, again it's remarkable that you mentioned lehman brothers and things like this. this, is this unique, this sort of thing happening? certainly to this extent but is it unique in itself? >> yes it is, sir, for the customer funds. >> you mentioned customers. how we differentiate between what is and what is not customer dollars? >> the customer funds on this side would be put in a segregated account, and those accounts would be tagged as for desegregated accounts. >> end of the money that they've discovered outside? >> vara can be money in a lot of other accounts outside of 4-d. the to the broker-dealer accounts, future accounts we tag as 40.7. >> very good. >> mr. giddens, the 550 million-dollar guarantee, is that money going to be used to make customers whole if we can't find the shortfall? >> that's not the nature of the guarantee. .. and if you end up with only having 60 cents or 65 cents, he'll make up to 10 cents. we don't go above the 75-cent number. it's basically cme -- if he pay