>> the commission was informed that mf global was going to be placed into a sipa liquidation. we were not involved in whether or not that decision should be made. >> who at cftc was handling the decisions related to enhanced supervision and the kind of bankruptcy or the bankruptcy proceedings? who at cftc was handling those decisions prior to the bankruptcy? >> up until november 3rd, chairman ginsler was directing those decisions. >> and since you've told me you don't know what his conflict of interest was that caused him to recuse himself five days after the bankruptcy, you don't have an opinion as to whether that same conflict of interest would have accrued prior to the filing of bankruptcy? do you know if something happened between the filing of bankruptcy and the five days later when he recused himself that created a conflict of interest? or is it the same conflict of interest that was there prior to bankruptcy and subsequent to bankruptcy? >> i do not know. >> thank you. mr. chairman, thank you. >> senator shelby. >> thank you. i apologize for missing part of your testimo

giddens as a sipa trustee, is to look for causes of action. and at this point, nothing is off the table. we not only look at employees and directors of the holding company as well as the subsidiary that mr. giddens is the trustee for, but third parties, including financial institutions who had different collateral requirements, which changed, particularly in the last several days. so at this point, literally everything is on the table, both individual persons as well as institutions. and what we will do maybe separately but maybe simultaneously is make legal determinations with our lawyers about whether a viable cause of action exists and whether it's efficient to pursue that cause of action. and my own case, representing the debtors, we may have a cause of action that would cost $10 million, but the institution or the individual has no assets. so we'd have to -- i'd have to weigh that in terms of wasting assets in the estate. >> thank you, mr. chairman. >> senator tesser. >> thank you, mr. chairman. i appreciate you holding this hearing. it's

and there are very detailed provisions of both the cftc right act and also the sipa act, which governs how you calculate those claims and pay them out. the big distinction and the big difference and the reason that, as mr. cook of the s.e.c. has pointed out, some of the securities customers have been paid in full, is the existence of the resources of the sipa fund which provides up to an additional $500,000 to cover losses in an account. >> is that $500,000 per account? >> yes, sir. yes, sir. $250,000 -- >> what is the average account? >> the average securities account -- >> at mf global. >> at mf global -- probably -- probably -- i'm just doing the calculation in my head was probably $1 million or more. >> okay. >> the commodities accounts, i think we as indicated, 75% were less than $100,000. and probably 93% of the commodities accounts were less than $1 million. now, in both cases, there were significant numbers of commodities customers and securities customers who in the last weeks transferred their accounts from mf global to other solvent firms. >> why did they do this? was there

and continues to work closely with the trustee in the sipa bankruptcy. we are also engaging in a come prehencive and ongoing enforcement investigation. it is imperative that the commission, the industry and the congress identify and assess the causes for the collapse and shortfall in customer funds. and to take corrective action where possible. we must do everything in our power to restore confidence in the futures markets so that producers, processers and other end users of commodities can once again hedge their price risk without fear of their funds being lost of frozen. section 4d of the cea and commission regulations require that an fcm holding customer funds treat such funds as belonging to the customer at all times. fcms are prohibited from using a customer fund to margin or guarantee the trades or contracts of another customer or of the fcm. and the fcm must maintain sufficient funds in segregated accounts to cover the net liquidating equity of each of its customers at any given point in time. our regulations also require an fcm to hold customer f

this is greatly facilitated because there is the financial support of the sipa fund. it has several billion dollars of assets in the ability to assess the industry for additional funds. those funds would assist, if it were necessary to cover shortfalls, to enable a trustee to transfer accounts to other solvents fcm's. i think, as mr. duffy was alluding to, there are problems here because you have to distribute equally. i believe that if you had a fund that would give you more flexibility as a trustee, you could more rapidly transfer accounts and have those available in your arsenal of things to move things along. >> commissioner sommers, could you describe any legal actions or efforts the cftc is taking to recover the u.s. customer funds being held in the u.k.? how is the work of the cftc being coordinated with mr. giddens efforts to protect u.s. customer efforts subject to regulation 30.7? >> thank you, senator. the cftc does not have the authority to bring an action to a u.k. court proceeding. we are, as we are in the united states, working very closely with mr. gid

this is greatly facilitated because there is the financial support of the sipa fund. it has several billion dollars of assets in the ability to assess the industry for additional funds. those funds would assist, if it were necessary to cover shortfalls, to enable a trustee to transfer accounts to other solvents fcm's. i think, as mr. duffy was alluding to, there are problems here because you have to distribute equally. i believe that if you had a fund that would give you more flexibility as a trustee, you could more rapidly transfer accounts and have those available in your arsenal of things to move things along. >> commissioner sommers, could you describe any legal actions or efforts the cftc is taking to recover the u.s. customer funds being held in the u.k.? how is the work of the cftc being coordinated with mr. giddens efforts to protect u.s. customer efforts subject to regulation 30.7? >> thank you, senator. the cftc does not have the authority to bring an action to a u.k. court proceeding. we are, as we are in the united states, working very closely with mr. gid

it's like the sipa, where they get to spy on american citizens rather than actually find the terroristside. >> host: let's hear from our guest. >> guest: i think what you -- the department of homeland security is actually looking across the board. it is not spying on individuals per se. it's looking for the terrorists. unfortunately we don't know what the terrorists look like. so we have to take very cautionary comprehensive approach to looking for those who are wishing us ill within our borders and without. >> host: we have lonni, florence, alabama, independent. good morning. >> caller: good morning. >> host: yes, sir. >> caller: yeah i would like to know what it is going to cost and how much you make in a year? >> host: tell us about the cost. we talk about the scope of the cybersecurity effort. how much money is being spent? do you have a sense. >> guest: i think a billion dollars is being spent. some of it is on the intelligence side so we don't know the exact numbers. estimates have said cybersecurity spend is spending is in the billions of dollars to protect all of our systems to