MF Global scandal continues to unfold
When the MF Global scandal rocked the financial services industry not too long ago, the SROs started to squirm.
The fact that $1.2 billion in client money went missing is going to leave a stain on all parties involved, fairly or not. The CME took an unusually harsh public line with respect to the actions of MF Global executives, which was fitting as the CME was the primary SRO overseeing the future business. But the CBOE also had an iron in the fire. It was the SRO for the its securities business via the CBSX.
Quietly, the CBOE has placed a senior compliance official on leave, a "move linked to" the on-going SEC investigation, according to the Wall Street Journal. CBOE serves as the "designated examining authority for about 160 broker-dealers, which do business on CBOE's markets and other exchanges. The role involves CBOE officials enforcing federal rules governing capitalization, collateral and accounting laid out by federal regulators and includes monthly financial checks as well as the inspection of firms' offices."
This strikes me as a classic failure to supervise issue. As of now, the compliance executive in question has not been charged, though the SEC and the CBOE itself are looking into various issues. To be sure, compliance officers often find themselves in the line for fire when improprieties are uncovered. Supervision has become a huge enforcement issue, and some think that compliance executives are unfairly targeted. We can only hope the truth--all of it--is uncovered.
- here's the article