commissioner sommers, i want to focus on cftc. what was the conflict of interest that chairman ginsler caused to recuse himself five days after the filing of the bankruptcy? >> i'm not familiar with the specifics or what he was thinking when he decided to recuse himself. >> it was not a discussion among the commissioners? >> there was not a discussion. >> then there was a vote i assume that selected you to be the lead on mf global? >> the other three commissioners voted. >> no discussion why chairman ginsler was no longer going to act in that capacity? >> no, sir. >> prior to the bankruptcy of mf global, looking back it seems clear mf global was under financial distress. you can look at stock prices, the new york fed reaction. did the cftc take any action to enhance its surveillance or to encourage others to enhance its surveillance prior to the filing of bankruptcy? >> in the week leading up to the bankruptcy filing, we had people on the ground at mf global, our staff in chicago was there on the ground. but the numbers and what w

>> i echo commissioner sommers. we had people validating reports against bank records and everything else. we got into saturday, we still have people on the ground. we were told there was an accounting error. it was of $900 million. everybody was trying -- >> an accounting error of $900 million. >> i found that staggering myself. some people felt it was too big. others thought it was too big and it could not be an accounting error. i was in the latter camp. >> did that send a lot of anxiety through your organization? >> it sent a lot of anxiety. people felt confident there was no way it was not an accounting error. >> were the people wrong? >> they were dead wrong. >> dead wrong? >> dead wrong. >> mr. giddens, you of the mf global trust the. as trustee, what is your portfolio? what are you supposed to do as a crusttrustee? >> i am appointed the equivalent of a chapter 7 liquidating trust. i have the same powers as a chapter 7 trustee for the rfcfc. my job is to marshal the assets of the broker-dealer a state and to

>> i will echo commissioner sommers for the most part. my recollection of what happened was we also had people on the ground tying out, validating the reports against bank records and everything else, and we got through friday. into saturday we still had people on the ground. then we were told there was an accounting error as we referenced in my earlier testimony of last year of $900 million. so everybody was trying to put the company -- >> an accounting error of $900 -- >> yeah, i found that pretty staggering myself, $900 million, yeah. some people felt it was too big, it had to be an accounting error. others thought it was too big and it could not be an accounting error. i was in the latter camp. >> did that send a lot of anxiety through your organization? >> it sent a lot of anxiety, but i think people felt fairly confident that there was no way that it wasn't an accounting error, and the company was going to be whole -- >> were the people wrong that felt that? >> the people were dead wrong, sir. >> dead wrong? >> dead wrong. >> mr. gi

sommers?ssioner com >> although we have never had this type of situation in the past, but if we were in a situation where we believe a company was in a situation where they could not meet their obligation, the commission could seek legal action to have a receiver appointed in an emergency situation. >> i will direct the same question to both of you. in the area of protection of customer segregated accounts, commissioner sommers and mr. duffy, most -- but of your organizations at staff on site in the office as the weekend before the bankruptcy filing. what steps the door agencies -- i will start with you commissioner sommers -- take to correct customer assets prior to learning that customer assets were missing? and what date, time, and stack it first learned that there was a profitable problem in asia -- a possible problem inge said short -- a possible problem? what steps did you take to ensure customer funds were not improperly transferred over the weekend, when there was more than a little mi

jill sommers is a commissioner for the commodity futures trading commission. mr. robert cook is the director of the securities and exchange commission's division. mr. richard ketchum is the chairman and ceo of the financial industry regulatory authority. mr. terrence duffy is an executive chairman of the chicago mercantile exchange. i thank all of you for being here today. i would like to ask witnesses to please keep their remarks to five minutes. your fault written statements will be included into the record. mr. giddens, begin your testimony. >> chairman johnson, ranking member shall be, and members of the committee, off thank you for inviting me to testify. i take seriously my duty as the trustee of mf global inc to treat customers equitably. i would like to provide some proposals that may merit further study and of course input from regulators, experts, and the public. the possible remedy is imposing personal liability on senior officers and directors when there is a regulatory shortfall. consideration should also be given for requiring not only financial oper

. >> miss sommers, in december 11th, the cftc finalized a rule prohibiting the investor customer funds in foreign sovereign debt securities. if the rule had been finalized before the collapse of mf global had not been overturned in 2005, does the cftc believe mf global would have avoided collapse? >> no, sir. >> okay. >> the investments under 1.25 are the permissible investments that the fcm can use to invest customer funds that are in segregation, but they cannot be used by the fcm themselves to invest it for the fcm's own gain. >> what is the likelihood of -- my understanding is you've identified where the money is. what is the likelihood of recovering it on behalf of all of those individuals whose money is abroad? >> with respect to the $700 million that was represented to the u.s. customers as being segregated for them, our position is that under uk law, that money should be treated as segregated customer funds. and i think we are reasonably confident of a positive outcome from the uk courts but there is no guarantee of that. >> one final question, mr. duffy. clearly what a company

at the same time, in bellport, new york, the cash mob was happening at two local downtown stores sommeralt and bellport liquors. >> i bought wine and that also supports the community. >> and the rules to be cash mobbed for a business is simple. >> locally owned and independently operated and secondly give back to the community. the second part is something that you can't fake. you can't just say, hey, i'm going to start sponsoring a team, and bring a cash mob to my business so i can do this. we generally look for people who have a longstanding commitment to their communities. >> afterwards andrew encouraging the cash mob participants to hang out in a local watering hole. >> they do the shopping and congregate again to relax and have drinks. there is an old saying that you are not friends with people that you like, but friends with people you do things with. >> with economies and small businesses suffering a cash mob can give the selected small business a shot in the arm and a much needed exposure and support especially when business is slow. >> if a local business is relying on a cash m

commissioner sommers, i want to focus on cftc.what was the instance chair gary tuck rescued himself after the bankruptcy? >> i'm not familiar with the specifics when he decided to recuse himself. >> there was not a vote? >> there was not a vote. >> no discussion about why chairman gensler was no longer going to act in that capacity? >> no, sir. >> prior to the bankruptcy of mf global, it seems clear mf global was under financial stress. look at stock prices, the new york fed reaction. did the cftc take any action to enhance surveillance or encourage others to enhance surveillance prior to the filing of the bankruptcy? >> in the week leading up to the bankruptcy filing, we had people on the ground at mf global, our staff in chicago was there on the ground, but the numbers and what we look at are whether or not the firm is capitalized and whether they have the money to meet their segregated obligation to their customer, and the data provided to us from mf global showed they were in compliance up until the very last few days. >> when