“Mr. Chairman, I cannot emphasize enough the importance of having a firm hand at the wheel of this nation’s regulator of the futures and swaps industry,” Roberts said in the letter. “That regulator also must know when to hand the wheel over to another if the appearance of a conflict of interest exists. I am astounded at your inability to do either completely, and by your refusal to let us know the scope of, or the reason for what you decided to do and not to do.”
The letter asks Gensler for a complete account of all of his interactions with Jon Corzine, former MF Global CEO, because of their past relationship, and why it would cause a distraction.
Gensler testified at a Senate Agricutlure hearing on December 1 of this year regarding oversight of the Wall Street Reform and Consumer Protection Act. During the hearing, Roberts called on Gensler to get to the bottom of why MF Global collapsed, leaving thousands of investors, farmers, ranchers, and small businesses without access to hundreds of millions of dollars.
The following is the complete text of the letter:
Dear Chairman Gensler:
I write to request further clarification regarding your participation, or your lack of participation, as Chairman of the Commodity Futures Trading Commission, in matters related to MF Global, Inc. and MF Global Holdings Ltd. I remain frustrated in your inability to fully explain the reasoning for your statement of non-participation and your inability to describe the scope of your decision.
During our hearing on December 1, you stated that you made a judgment that you did not want your participation to become “a distraction.” And yet, you obviously did not harbor these concerns during meetings and/or phone conversations with MF Global officials prior to its bankruptcy when they were trying to persuade the Commission and you with regard to Rule 1.25.
What specifically caused you to suddenly have these concerns rise to prominence a week after MF Global was forced into bankruptcy? In your November 8 letter and at the December 1 Senate Agriculture Committee hearing, you indicated that you “made a judgment” to step aside because you did not want your participation “to be in any way a distraction” to the investigation. Yet, you also indicated that it was best to step aside when it became clear that the CFTC’s probe could lead to “possible civil and criminal actions.” Please clarify what you meant by this statement.
Mr. Chairman, I find it amazing that during the hearing you refused to say the name “Jon Corzine” and yet we both know that the reason for your recusal is your past relationship with former MF Global CEO Jon Corzine. Is this correct?
In his written testimony, Governor Corzine outlined numerous interactions with you during his tenure at MF Global dating back to May of 2010 of which you had not informed the committee. Please provide a complete accounting of all of your interactions with Governor Corzine since he joined MF Global.
It appears your interactions have included lecturing to his class on government regulation at Princeton, and attending a wedding and a conference. Why did you not feel early on that this relationship was a distraction? If these type of contacts caused you to “make a judgment” not to participate in the investigation, why did the same contacts not lead you “to make a judgment” when you were being lobbied by MF Global? Or does your recusal from CFTC enforcement matters go beyond your relationship with Governor Corzine?
Mr. Chairman, I cannot emphasize enough the importance of having a firm hand at the wheel of this nation’s regulator of the futures and swaps industry. That regulator also must know when to hand the wheel over to another if the appearance of a conflict of interest exists. I am astounded at your inability to do either completely, and by your refusal to let us know the scope of, or the reason for what you decided to do and not to do. Furthermore, it seems that it never occurred to you to think that your relationship with Governor Corzine would be “a distraction” until things began unraveling with MF Global. Please explain why if your relationship with Jon Corzine would cause “a distraction” during the MF Global investigation, it did not cause “a distraction” when you met with Governor Corzine to consider a rule-making that would affect MF Global’s business?
Based on your testimony, I understand that Commissioner Jill Sommers is now responsible for all CFTC enforcement matters related to MF Global. I request a full written summary of all matters since your statement of non-participation in which you have participated directly or indirectly in any matters related to the conduct of the investigation, possible enforcement action or potential regulatory recommendations regarding MF Global, Inc. or MF Global Holdings. These responses are necessary to provide a complete understanding of the scope of your non-participation and your timing of such action.
Thank you for your attention to these questions, and I look forward to your prompt response.