MF Global.  Peregrine Financial.  MBS Clearing Corp (NOT).

[ by Melanie Gretchen and Howard Haykin ]

There was no way the CFTC would allow New York trader Mark Fisher and his registered futures commission merchant (FCM), MBF Clearing Corp., to follow in the footsteps of the predecessor firms, and thus complete the "trifecta of unsolved cases involving lost customer funds."   Instead, the regulator of the commodities and financial futures markets levied a very stiff fine on a firm that allegedly violated industry segregation rules.  

CFTC Findings and Allegations.   Between September 2008 and March 2010, MBF Clearing Corp allegedly held between $30 million and $90 million of customer funds at a separate financial institution that did not meet the requirements of the Commodity Exchange Act. 

• The account did not have the "legal obligation to make customer funds available for redemption by the next business day".  
• The account was not properly labeled as a "customer segregated account."
• Firm failed to obtain from the financial institution a letter acknowledging that the funds in the account were customer funds to be kept segregated from MBF’s funds.
• Firm similarly failed to obtain and/or keep written acknowledgments for at least 6 additional accounts that held customer funds.
• Firm failed to adequately supervise customer funds.
• Firm did not have WSPs governing the opening and maintenance of customer segregated accounts.

CFTC Sanctions.  The CFTC obtained a court order requiring MBF Clearing Corp to pay a $650K fine.  Once paid, the firm would be clear of CFTC charges. 

For further details, go to [Reuters, 12/3/12]    [ CFTC PR 6437-12, 12/3/12 ].