Regulators: We Know Where MF Global Funds Went

According to a

, regulators have made substantial progress in piecing together what happened to missing funds from client accounts in the days prior to brokerage MF Global's collapse. They are currently trying to sort out which transactions were legitimate and which were not before moving to release more money to MF Global customers. Jill Sommers, who is in charge of the CFTC's review of the failed futures broker, said that regulators "are far enough along the trail" that they know what happened to the missing money. She added that, "Now it's just finding out which ones of those transactions are legitimate and which ones of them are illegitimate." While Sommers declined to reveal any details about what the investigation has discovered, she said that "We certainly don't want to lead anyone to believe we don't know what happened. We do know, and we see where all the transactions went." Bart Chilton, who is a fellow CFTC Commissioner, however, had a different take on the progress of the investigation and seemingly contradicted Sommers' statements. "Based upon the most up-to-date information available, I do not have confidence that we know where all the money went," Chilton said. In any event, it would appear that the CFTC knows more about what happened to the missing client funds than

- if Jon Corzine, et al. are to be believed (not likely). The former MF Global CEO along with CFO Henri Steenkamp and President and COO Bradley Abelow testified in front of a Senate Agriculture Committee on Tuesday that they have no clue what happened to roughly $1.2 billion in client money. At the same Committee hearing, CME Group's

Executive Chairman Terrence Duffy basically completely contradicted Corzine's testimony, alleging that a CME auditor participated in a phone call during which an MF Global employee indicated that Corzine knew the firm used customer money to lend $175 million to its European affiliate. Despite the pleas of ignorance from MF Global management, the CME Group has said that there is little doubt the firm misused customer funds as it faced a liquidity crisis. CME operates the world's largest futures exchange, and in that role, was MF Global's front-line regulator. While it appears that the CFTC is making progress in its investigation, it is not clear when MF Global customers will be able to get their money back. Currently, 72% of accounts have been made whole. The process could continue to drag out as regulators scour thousands of transactions to determine which were illegitimate in an attempt to pin down the exact amount of the shortfall. Jill Sommers said that "Until you actually know down to the penny which ones of those transactions were not legitimate transfers, you're not going to know whether or not you can claw back some of that money from other accounts." She added, "Until you know the exact shortfall, you're not going to know how much can then be distributed to customers above the 72 percent." Now, Benzinga readers can stay up to date on all of the day's market moving news with a free

trial.