Bonuses for MF Global Executives?


Senate Panel Fights Bonuses in MF Global Case


A Senate committee probing the collapse of MF Global Holdings Ltd. sent a letter asking the trustee overseeing the failed financial firm to abandon a plan to pay bonuses to former top executives.

Members of the Senate Agriculture Committee told the trustee, former Federal of Bureau Investigation director Louis Freeh, in the letter that it would be “outrageous” to proceed with a proposal to a bankruptcy judge that could result in payouts of hundreds of thousands of dollars each for MF Global’s chief operating officer, finance chief and general counsel.

All three were at MF Global when it tumbled into bankruptcy protection and an estimated $1.6 billion went missing from customer accounts. They are currently working for Mr. Freeh at MF Global’s bankruptcy estate.

The letter, written by Sen. Debbie Stabenow (D., Mich.), the panel’s chairwoman, was signed by all 21 Democrats and Republicans on the committee.


A spokeswoman for Mr. Freeh referred to a letter he sent to another senator March 12 in which Mr. Freeh said he hadn’t made any decisions on the bonuses or their amounts. The bankruptcy court and a Justice Department representative monitoring MF Global’s case, among other people, would have an opportunity to weigh in on any bonus proposal when it is made, and the court would ultimately have to approve it, he added.

The letter came as a separate trustee overseeing MF Global’s brokerage unit proposed additional payments to commodities clients of the failed securities and futures firm, including the first to those with accounts frozen on non-U.S. exchanges.

Trustee James Giddens asked the bankruptcy judge overseeing MF Global to approve a further distribution of as much as $685 million, adding about 10 cents on the dollar to the 72 cents already recovered by U.S. customers who held funds on deposit.

The latest request includes about $600 million held as segregated assets for clients trading on U.S. exchanges and another $50 million related to U.S. customers trading overseas. An additional $35 million is related to physical customer property that has been or will be reduced to cash.

An estimated $1.6 billion in client assets remain out of reach, with some money missing and other funds held up by proceedings in other countries.

With customers still missing some of their money, Mr. Freeh, the trustee for the holding company, has been under increasing pressure to resist paying incentive bonuses to executives who were at the company when the shortfall developed. Those executives and other MF Global employees haven’t been accused of wrongdoing.

The backlash comes after The Wall Street Journal reported last week that Mr. Freeh planned to ask the bankruptcy judge in charge of MF Global’s case to approve potential bonuses for Bradley I. Abelow, Henri J. Steenkamp and Laurie R. Ferber.

They were lieutenants of former MF Global Chairman and Chief Executive Jon S. Corzine, the former Goldman Sachs Group Inc. GS -1.03{962fe9be9a8a5c386944bfa41f48d98b010325707b70b1fa6182bcabd27c5d7f}chairman and New Jersey governor whose bets on bonds of troubled European countries led to a run on MF Global last fall. He resigned in November after MF Global sought bankruptcy protection.

“The executives who would receive these bonuses should be held accountable for the failure of their company, not rewarded for diverting even more money away from customers,” said the letter.

—Doug Cameron and Patrick Fitzgerald contributed to this article.

Story by Mike Spector and Aaron Lucchetti, Wall Street Journal

Write to Mike Spector at and Aaron Lucchetti at

A version of this article appeared March 16th 2012 on page C3 in some U.S. editions of The Wall Street Journal, with the headline: Fighting Bonuses in MF Global Case.


The full text of the letter is below.

March 15, 2012

The Honorable Louis Freeh

Chapter 11 Trustee, MF Global Holdings, Ltd,

c/o Freeh Group International Solutions, LLC

1185 Avenue of the Americas, 30th Floor

New York, NY 10036


Dear Judge Freeh:

We are deeply troubled by media reports that you are considering seeking permission of the court to pay enormous bonuses to top executives of the now-bankrupt MF Global Holdings.  It is difficult to understand why you would even consider paying anyone a bonus while nearly $1.6 billion in customer money is still missing.  And it is absolutely outrageous to propose paying bonuses to the very people who were responsible for the firm’s operational, legal, and financial management at the time customer money disappeared.

A fundamental principle of commodities trading is that the firm’s money must be accounted for separately and segregated from customer money.  Throughout the long history of futures markets, no firm has ever lost customer money of this magnitude – until MF Global.  The failure of senior management in this case is truly unprecedented.

When one of these executives testified before our committee, under oath, he admitted that, knowing what he knows now, he could not certify that MF Global had appropriate financial controls in place.

Most egregiously , the proposed bonuses could not only reduce the amount of money available to repay MF Global customers, but the bonuses would be based on how much these executives have been able to recover for the firm’s creditors, not the firm’s customers.  The executives who would receive these bonuses should be held accountable for the failure of their company, not rewarded for diverting even more money away from customers.

Thousands of MF Global customers still have not received their missing money.  Giving bonus checks to the very people who lost that money is offensive on its face.  We strongly urge you to reconsider your decision to seek bonus pay for MF Global executives.


Sen. Debbie Stabenow (D-MI), Chairwoman

Sen. Pat Roberts (R-KS), Ranking Member

Sen. Max Baucus (D-MT)

Sen. Michael Bennet (D-CO)

Sen. John Boozman (R-AR)

Sen. Sherrod Brown (D-OH)

Sen. Robert Casey, Jr. (D-PA)

Sen. Saxby Chambliss (R-GA)

Sen. Thad Chocran (R-MS)

Sen. Sen. Kent Conrad (D-ND)

Sen. Kirsten Gillibrand (D-NY)

Sen. Chuck Grassley (R-IA)

Sen. Tom Harkin (D-IA)

Sen. John Hoeven (R-ND)

Sen. Mike Johanns (R-NE)

Sen. Amy Klobuchar (D-MN)

Sen. Patrick Leahy (D-VT)

Sen. Richard Lugar (R-IN)

Sen. Mitch McConnell (R-KY)

Sen. Benjamin Nelson (D-NE)

Sen. John Thune (R-SD)

Posted by John Walton

©Northern Ag Network

Sources include:

Wall Street Journal –

Sen. Debbie Stabenow –

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