Bloomberg reports that MF Global Holdings Ltd. argued in a December 2010 letter to regulators that futures brokers didn’t need tighter restrictions on how they invest client funds. Ten months later, as MF Global filed for bankruptcy, about $1.6bn in customer accounts was missing.
Within weeks, U.S. derivatives regulators approved a measure, dubbed the 'MF rule', designed to limit the kinds of transactions firms could make using client funds. The rule had been on the regulatory backburner as lobbyists sought to stall or alter new curbs proposed after the 2008 financial crisis.
Along with JPMorgan’s recent huge trading losses, MF Global’s case demonstrates that an army of Washington lobbyists seeking to roll back U.S. rules and regulations can undermine the interests of the businesses they serve.
'This is a classic example of how industry claims to know better than the bothersome bureaucrats in Washington', said Nancy Watzman, a consultant for the Sunlight Foundation, a Washington-based group that advocates open government records.
JPMorgan’s loss follows lobbying by its CEO, Jamie Dimon, to weaken the 2010 Dodd-Frank financial overhaul, which he has referred to as 'Dodd Frankenstein'.
To access the full article, please hit the link immediately below:
image: © Everaldo Coelho