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MF Global Execs Don't get Bonuses

MF Global Execs Don't get Bonuses
Hearing this week shows that the money has been found, sort of.

Congress got more insight into the MF Global debacle this week as James Giddens and Louis Freeh, trustees involved two areas of the bankruptcy testified before Congress. First off, Giddens told the Senate Banking Committee that his team had finished its analysis of how the money went missing, noting they can trace where the cash and securities went.

NO BONUSES: The chance that executives would get 'performance bonuses' drew fire from Congress.

However, knowing where the money is and getting it back for victims is not so clear. About $700 million is in the UK subsidiary of the failed firm, and Giddens and his team are working with the courts there to get the money brought back. Giddens says his team is engaged in ongoing talks on the issue of getting funds back, and a substantial portion is in the hands of JP Morgan.

Meanwhile another $685 million in funds will now be returned to victims as a New York bankruptcy judge is releasing those funds. That money would go to accounts that have been frozen since the Oct. 31, 2011 bankruptcy was filed.

One controversial issue was the payment of executive bonuses to the MF Global management team. Louis Freeh, bankruptcy trustee, has confirmed that those executive would not receive those "performance related" funds. Jon Tester, D-Mont., had called the idea of distributing the bonuses as "outrageous."

The Senate Ag Committee issued a statement Wednesday, applauding Freeh "for heading their call to drop any possible plan to pay bonuses to MF Global Executives." The joint statement from Chairman Debbie Stabenow, D-Mich., and Ranking Minority Member Pat Roberts, R-Kan., who concurred that the idea would be a challenge.

As for avoiding this problem in the future? Giddens told the Senate committee that in hindsight more frequent reporting and making senior executives more "personally liable for shortfalls in customer funds" would incentivize better fund management, according to a statement from Tester's office.


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