Print version Email to a friend

MF Global ex-risk chief to testify before Congress

27 Jan 2012 19:10

Source: reuters // Reuters

* House Financial Services panel to hold hearing Feb. 2

* MF Global ex-chief risk officer to give his side of story

* Representatives from S&P, Moody's to also testify (Adds MF Global, S&P declined comment)

WASHINGTON, Jan 27 (Reuters) - Michael Roseman, the former chief risk officer who is said to have raised red flags about aggressive trading bets at MF Global, will testify before Congress next week, according to a congressional staffer familiar with the matter.

Roseman will appear on Feb. 2 before a House Financial Services subcommittee, which is exploring the role that ratings agencies and risk officers played in the collapse of the futures brokerage MF Global.

Michael Stockman, who succeeded Roseman as chief risk officer for MF Global, will also testify, along with representatives from Standard and Poor's and Moody's Corp, the congressional staffer said.

MF Global filed for bankruptcy on Oct. 31 after investors and customers became rattled over the firm's $6.3 billion bet on European sovereign debt.

Lawmakers are studying the vigilance of the ratings agencies, which did not significantly downgrade MF Global until just days before, or hours after, it filed for bankruptcy.

Meanwhile, investigators are still searching for more than $600 million in missing customer funds, and are probing whether MF Global inappropriately used that money for the firm's purposes.

Roseman has become a figure of debate about the MF Global collapse, but has not yet publicly given his account of the firm's risk-taking.

Lawmakers at a House Agriculture Committee hearing in December questioned former MF Global Chief Executive Jon Corzine over whether Roseman voiced concerns about the firm being overexposed to European sovereign debt.

Corzine replied: "Mr. Roseman certainly had a different view about the sovereign default risk associated with Euro sovereigns and particularly in the context that we did other business in those countries, and he expressed that to me directly. He expressed that to the board."

House Agriculture Committee Chairman Frank Lucas also pressed Corzine about whether he was involved in the decision to have Roseman leave his post in early 2011.

Corzine said he believed the firm needed someone who had more knowledge with the broker-dealer side of MF Global's business, and that there were personnel issues.

"There were other issues about how people worked with each other. Not with me in particular, but within the firm that led the board and my agreement to that, that we should change chief risk officers," Corzine told the December hearing.

A representative for MF Global declined comment. S&P spokesman David Wargin declined to comment. Moody's was unavailable for immediate comment. Contact information for Roseman could not immediately be obtained. (Reporting By Alexandra Alper; Writing by Karey Wutkowski; Editing by Phil Berlowitz and Tim Dobbyn)