A Congressional subcommittee voted on Wednesday to subpoena an MF Global executive at the center of a federal investigation into wrongdoing at the firm.
The executive, Edith O'Brien, must appear next week before Congress for a hearing about the chaotic final days before MF Global filed for bankruptcy in October. The subpoena came despite Ms. O'Brien's assertion that she would not answer questions from lawmakers; she was expected to invoke her constitutional right against self-incrimination. Ms. O'Brien, MF Global's assistant treasurer who was based in Chicago, has also declined to cooperate with federal prosecutors without first receiving immunity from criminal charges
Customers of MF Global want streamlined liquidation
The primary advocate group for former MF Global customers is undertaking an effort to convert the commodities broker's bankruptcy status to one that allows a more streamlined liquidation process, saying it would preserve more potential payback for customers.
The Commodity Customer Coalition, which represents thousands of customers of the fallen broker wants to ask the U.S. Bankruptcy Court to handle the case under Chapter 7 of the bankruptcy code, designed specifically for liquidation of assets.
A spokesman said the coalition has reached out to the Commodity Futures Trading Commission, the U.S. futures regulator, in hopes of gathering support for a planned court filing to change the case from Chapter 11, which allows a company to keep operating while it tries to reorganize and negotiate with creditors.
Freeh group doesn't comply with law
MF Global Holdings Ltd.'s hiring of consultant Freeh Group International Solutions doesn't comply with the bankruptcy code, said the U.S. Trustee, a Justice Department arm that oversees bankruptcies.
Former Federal Bureau of Investigation director Louis Freeh, MF Global Holdings' Chapter 11 trustee, sought permission to hire the consulting firm along with his law firm, Freeh Sporkin & Sullivan. The law only allows a trustee to hire a law firm or accounting firm to protect the trustee's disinterestedness, U.S. Trustee Tracy Hope Davis said in papers filed Monday in U.S. Bankruptcy Court in Manhattan.
"Such inconsistency may be curable should FGIS be able to demonstrate that it is an accounting firm authorized under applicable law to practice public accounting," Ms. Davis said.