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Roberts remains on Gensler's trail.

Senate Agriculture Committee ranking member Pat Roberts (R-Kan.) says Commodity Futures Trading Commission Chairman Gary Gensler is participating in CFTC's response to the downfall of MF Global even though Gensler has recused himself from the agency's investigation into the firm's collapse.

In a statement posted on his website, Roberts specifically took Gensler to task after being told the chairman had directed agency staff to develop recommendations to prevent another situation like MF Global's.

Gensler last year recused himself from the case saying that he did not want his prior business relationship with MF Global Chairman Jon Corzine to be a "distraction."

Lawmakers seeking answers to the MF Global bankruptcy were nearly unanimous in criticizing Gensler for recusing himself, with several suggesting that he did so to avoid having to answer questions on the matter. Among those criticizing him the hardest was Roberts.

MF Global, a futures commission merchant, filed for bankruptcy Oct. 31, hours after telling regulators that as much as several hundred million dollars in customer segregated funds were missing. Soon after, Gensler signed a statement of non-participation with regard to the CFTC's investigation into the case.

In his posted comments, Roberts says he found it "odd and confusing that Chairman Gensler can partially recuse himself, or 'non-participate,' in matters regarding enforcement on MF Global, but he can direct commission staff to make recommendations on the matter. It appears the chairman is trying to recuse himself solely from questioning before the Senate."

A CFTC official told the press that the letter of non-participation stated that Gensler would recuse himself from MF Global as it moved into an enforcement investigation. The official said the agency interprets the letter as allowing Gensler to participate in broader policy issues related to the protection of customer funds.

As such, the official cited CFTC's recent adoption of a rule regarding how firms can invest segregated customer funds and another rule regarding the segregation of funds collateralizing cleared swaps.

CFTC Commissioner Jill Sommers, a Republican appointee, recently wrote to Roberts to say that Gensler "has directed commission staff to develop recommendations for enhancing commission and designated self-regulatory organization [DSRO] programs related to the protection of customer funds, which could include changes to commission rules governing futures commission merchants, enhanced commission oversight of DSROs, and possible statutory changes, among other things."

The line that Gensler is walking is intended to allow him to participate in regulatory activities involving futures commission merchants in general without participating in activities involving MF Global in particular. This distinction is not one that Sen. Roberts appears prepared to accept.

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Title Annotation:Pat Roberts
Publication:The Food & Fiber Letter
Date:Feb 6, 2012
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