MF Global Roundup: Senators Want Bonuses Blocked

Two letters to trustee try to convince him to drop planned bonuses.

Published on: Mar 12, 2012

Former Federal Bureau of Investigation Director Louis Freeh, the bankruptcy trustee in the MF Global has drawn fire from two members of the Senate on plans to pay bonuses to top executives of MF Global when it collapsed.

Senator Jon Tester, D-Mont., wrote in a letter to Freeh that it would be outrageous to propose payouts of several hundred thousand dollars each to MF Global's chief operating officer, financial officer and general counsel.

"Rather than reward executives in the hopes of being able to pay back creditors, I urge you to forgo executive bonuses and instead use these funds to repay the farmers and ranchers whose trust was so betrayed by MF Global," Mr. Tester wrote. "I look forward to your reconsideration of this decision."

According to reports by the Wall Street Journal Freeh plans to ask for approval from the bankruptcy case to authorize the bonuses to those executives as well as 20 or so other MF Global employees working for Freeh.

Senator Amy Klobuchar, D-Minn., also wrote a letter to Freeh calling his plan unacceptable, especially in light of several civil and criminal investigations into the collapse of MF Global still underway. The Senate Agriculture Committee, of which Klobuchar is a member, is conducting an investigation into the firm's collapse that caused them to file bankruptcy on Oct. 31, 2011.

"These same executives were at the helm of MF Global when it collapsed," Ms. Klobuchar wrote. "Issuing bonuses with the company's holdings sends the wrong message to customers already skeptical of the bankruptcy process."

Tester and Ranking Member of the Senate Financial Committee Charles Grassley, R-Iowa, both voiced concerns Friday about federal bankruptcy law limiting reward bonuses to former MF Global employees.

As of late Sunday, according to a spokesman, Freeh had not made a decision about the bonuses.

House Panel Wants to Question Execs

The House Financial Service Committee wants two former executives of MF Global to provide an explanation during a hearing of a series of money transfers to hopefully find who is responsible for $1.6 billion missing from customer accounts.

Edith O’Brien, who was the firm’s treasurer, and Christine Serwinski, who was the brokerage’s North American chief financial officer have been contacted about testifying although there is no word on whether they have agreed to or not. Should they refuse, the committee could subpoena them to testify. Members of the committee believe Serwinski and O'Brien, amid new evidence showing company officials transferring money from customer accounts, can provide details into the final days of the firm.