March 26, 2023

DealBook: MF Global Inquiry Turns to Its Primary Regulator

Terrence Duffy of the CME Group testified at a Senate hearing about MF Global's missing funds.Andrew Harrer/Bloomberg NewsTerrence Duffy of the CME Group testified at a Senate hearing about MF Global’s missing funds.

Federal authorities investigating the collapse of MF Global have expanded their inquiry to include the actions of the CME Group, the operator of the main exchange where the commodities brokerage firm conducted business, according to people briefed on the matter.

CME, which also served as MF Global’s primary regulator, has come under heavy criticism after $1.2 billion in customer money disappeared from MF Global. The Commodity Futures Trading Commission, the government agency leading the case, is now scrutinizing CME’s conduct in the days before MF Global filed for bankruptcy on Oct. 31.

In particular, the commission is reviewing whether CME’s efforts to verify the safety of customer funds were sufficient, the people said.

CME, for its part, has said that MF Global may have intentionally produced inaccurate documents related to customer accounts.

As the owner of the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange, the CME Group is a major force in commodities and futures. It is the dominant United States exchange operator for billions of dollars in trades, affecting food prices and Wall Street profits. A censure of any kind would be a powerful, if merely symbolic, critique of the behemoth.

If the C.F.T.C. finds that CME did not meet the standards of so-called self-regulatory organizations, it could fine or sanction the exchange. The commission could also revoke CME’s status as a self-regulator, though that is unlikely. Experts say it is rare for the government to hand down any manner of sanction against a self-regulatory body.

CME has not been accused of any wrongdoing, and the review of its actions may not produce any findings.

“Given the issues involved, we welcome and expect the C.F.T.C.’s investigation as a natural part of this process,” a spokeswoman for the CME Group said in a statement. “We are confident the C.F.T.C.’s review will determine we did everything right within our regulatory power. The system did not fail; the firm broke the law by misusing customer funds.”

The collapse of MF Global — and the ensuing hunt for the missing money — has rippled through Wall Street, Washington and the Farm Belt. Creditors are fighting for their cut in bankruptcy court, lawmakers are holding Congressional hearings and farmers and other clients are waiting for their money to reappear.

Don Laird, a retired investor in Texas, says he is still trying to get back hundreds of thousands of dollars of his money that was at MF Global.

“I think CME should be investigated for failure to regulate, and that investigation should involve what liability they should have for any losses MF Global customers suffer,” he said.

Regulators, chastened that the debacle occurred on their watch, are searching for the money while also trying to prevent the next MF Global from happening. As part of that effort, the C.F.T.C. is close to finishing “limited reviews” of customer accounts at the 14 largest futures brokers.

The results of these cursory reviews, which include divisions at Goldman Sachs and JPMorgan Chase, are expected to be released in the next few weeks, according to one of the people briefed on the matter.

But there are roughly 100 futures brokers, so the government has called on financial industry self-regulators to assist with the spot checks, including the National Futures Association, which recently finished looking at 19 institutions and found no problems, according to a person with direct knowledge of the matter.

The government has also called on CME to assist. Notwithstanding the government’s scrutiny of its actions, CME agreed to review 33 futures firms. So far, the profit-making exchange has completed 31 of them.

The first inkling that something was amiss between the exchange and the government came about three weeks ago. At a Congressional hearing in December about MF Global, Terrence Duffy, the executive chairman of the CME Group, told lawmakers that his exchange was asked to back away from the investigation into missing customer money at the brokerage firm.

Asked for an explanation by members of the House Financial Services Committee, Mr. Duffy said: “I guess you’d have to ask the C.F.T.C. why. I don’t know.”

But the agency was concerned that a separate inquiry by CME would complicate efforts to discover wrongdoing at MF Global. Many government agencies, including the Federal Bureau of Investigation, are already investigating the case. David Meister, the chief of the C.F.T.C.’s enforcement division, asked CME to step aside from the investigation during a conference call with the exchange’s lawyers, said people briefed on the phone call. It is not clear whether Mr. Meister indicated that his division was also scrutinizing CME.

A spokesman for the C.F.T.C. declined to comment.

One question for authorities is why CME appeared to be slow to respond to the crisis enveloping MF Global in the week before its bankruptcy.

The publicly traded exchange did not dispatch employees to MF Global’s Chicago headquarters until Oct. 27, three days after Moody’s Investors Service cut its rating on the brokerage firm, sending it into a tailspin.

When CME officials arrived at MF Global, they reviewed the firm’s latest statements of customer accounts to ensure client money was safe. Documents indicated the funds were secure, the CME said.

But then the money vanished, and CME pointed the finger at MF Global.

The exchange said that MF Global might have shifted client money “in a manner that may have been designed to avoid detection.”

“It appears that any transfer of such funds occurred after the completion of CME audit procedures,” the exchange said in a statement shortly after the Oct. 31 bankruptcy filing.

But CME never completed an audit, a point officials later conceded when pressed by lawmakers. Instead, CME said it was a spot audit, though they did not complete that either.

CME was unable to verify the customer accounts because MF Global did not hand over needed information corroborating the account statements, according to a submission it made to Congress.

But that did not stop exchange officials from heading home for the weekend at about 6 p.m., on Friday, Oct. 28.

The officials did not return until that Sunday afternoon, after an apparent shortfall in customer funds was discovered.

The fallout has left some customers questioning a model where firms like CME profit from the institutions they regulate.

Other customers are more sanguine, however, adopting a wait-and-see approach when it comes to their missing money and the exchange’s culpability.

John Spangler, a farmer in Marietta, Ill., and his wife, Holly, say CME has operated flawlessly through the many years they have traded corn and soy futures.

Though they are concerned about getting back their money, which amounts to a few thousand dollars, they have not lost faith in the industry.

“As long as the CME comes through with everything, I don’t think there will be any problems,” Mr. Spangler said. “If they don’t,” he said, “things are going to need to change.”

This post has been revised to reflect the following correction:

Correction: January 6, 2012

An earlier version of this post misspelled the surname of Don Laird, a retired investor in Texas, as Baird.

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DealBook: MF Global Scrutinized on Money Move

Jon S. Corzine testified at a House panel hearing on the collapse of MF Global.Jonathan Ernst/ReutersJon S. Corzine testified at a House panel hearing on the collapse of MF Global.

Federal authorities investigating the demise of MF Global think that the firm began improperly moving customer money to a middleman on Oct. 27, according to people briefed on the matter.

The transfers, which indicate the brokerage firm misused client funds earlier than previously believed, represent a new line of inquiry in the hunt for more than $1 billion in missing money.

In MF Global’s last days, the brokerage house was frantically winding down trades to shore up its balance sheet and stave off bankruptcy. Investigators are examining whether the firm — as part of that effort — began moving client funds to the Depository Trust Clearing Corporation, a financial intermediary responsible for closing out some of MF Global’s transactions, these people say.

The new details bolster claims that MF Global was careless with customer money, regardless of the company’s intentions. Authorities previously found that MF Global had used roughly $200 million of client funds to replenish an overdrawn account at JPMorgan Chase in London on Oct. 28, the last business day before the firm filed for bankruptcy.

Now, investigators are also looking at billions of dollars of transfers from MF Global to the Depository Trust Clearing Corporation, a fraction of which is believed to be customer funds. People briefed on the matter say the middleman passed some of the money to banks and other firms that traded with MF Global, which was once run by Jon S. Corzine, the former governor of New Jersey.

In addition, federal authorities are reviewing whether MF Global used customer money to pay the clearing corporation as part of a margin call. Financial intermediaries routinely require extra collateral when firms run into trouble. A different clearinghouse in London forced MF Global to pay roughly $300 million to back some of its bond holdings during its last week.

It is unclear how much customer money was transferred to the Depository Trust Clearing Corporation, and whether officials at MF Global knew they were using client funds. Haphazard recordkeeping and the flood of transactions in its final days might have concealed whether MF Global was deploying the customer cash for firm needs.

A spokesman for the clearing corporation declined to comment.

Kent Jarrell, a spokesman for the trustee overseeing the liquidation of MF Global’s brokerage unit, said that the trustee “has not made a determination about customer cash that went through” Depository Trust.

“We will make a legal determination about whether customer money can be recovered,” Mr. Jarrell said. If it can be recovered, “we will use all legal avenues to do so,” he added.

As MF Global transferred funds to the clearing corporation, regulators started to raise concerns about the customer money after a routine inquiry. In the firm’s final week, senior officials at the Commodity Futures Trading Commission asked MF Global employees to identify the whereabouts of the money. In response, the firm provided a document that highlighted specific MF Global units, according to a person briefed on the matter.

But one of the units, MF Securities, was not listed on the firm’s broader organizational chart, the person said. That discrepancy raised red flags among regulators that the firm might have been misusing customer money.

A person close to MF Global says that the firm’s broker-dealer unit used to be called MF Securities, and people in the company often referred to it by that name. Even so, regulators at the Commodity Futures Trading Commission pushed for assurances that the money was safe. MF Global asked for more time.

Three days later, on Oct. 30, MF Global alerted federal authorities to the shortfall.

Since then, regulators and the trustee, James Giddens, have been searching for the money. The shortfall is now estimated at $700 million to $1.2 billion. The situation has left customers like farmers and hedge funds without a third of the money in their MF Global accounts.

In Congressional hearings, Mr. Corzine and his top deputies have defended their actions, saying they were unsure what happened to the money. No one has been accused of any wrongdoing. A spokesman for the Commodity Futures Trading Commission, which is leading the investigation, declined to comment.

Regulators are focusing on transactions in the firm’s last days to determine when MF Global violated a strict rule that prohibits the mingling of customer money and firm funds.

On Oct. 28, the firm moved roughly $200 million to JPMorgan, after overdrawing an account in London. People briefed on the investigation have said that the money belonged to customers.

“At that time, I was trying to sell billions of dollars of securities to JPMorgan Chase in order to reduce our balance sheet and generate liquidity,” Mr. Corzine told lawmakers on the oversight panel of the House Financial Services Committee. “JPMorgan Chase told me that they would not engage in those transactions until overdrafts in London were cleaned up.”

After the transfer, JPMorgan, one of MF Global’s main banks, questioned Mr. Corzine about the source of the money. Mr. Corzine said he was assured that the cash was legitimate.

The transfers to Depository Trust are of particular interest to regulators. Authorities believe that the transactions represent one of the earliest misuses of customer funds by MF Global.

In part, MF Global transferred money to the clearing house to unwind large positions in its proprietary trading portfolio. The brokerage firm, for example, may have used some funds to cover losses when it sold corporate debt and commercial paper holdings.

The vast majority of the transfers were related to a common transaction on Wall Street known as repurchase and reverse repurchase agreements. In these arrangements, MF Global exchanged securities and short-term cash with investors like hedge funds or banks and promised to return the money and securities at a later date.

As MF Global started to deteriorate, the firm moved to unwind the transactions to reclaim money they posted to support the agreements, an amount of capital thought to be in the hundreds of millions of dollars. The transactions largely took place through the Depository Trust.

But trading partners and clearinghouses — dealing with a large amount of transactions and concerned about the welfare of MF Global — did not immediately return the cash to the brokerage firm, according to the people briefed on the transactions. Without the capital in hand, MF Global may have tapped customer funds to continue unwinding its portfolio, the people said.

At the same time, the clearing corporation ordered MF Global to hand over more cash against its remaining trades, as part of a margin call. The amount of money MF Global was required to post is unclear, but the brokerage unit may have used customer cash to meet those new demands, the people said.

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Common Sense: An Unthinkable Risk at a Brokerage Firm

Until the collapse of MF Global, that’s a question I thought I’d never have to ask.

Brokerage firms are required by law to maintain segregated accounts holding all client assets, including stocks, bonds, mutual funds, money market funds and cash. The law was passed after the 1929 crash, in the depths of the Depression, to make sure that customer assets were there at all times, ready to be disbursed even if everyone asked for their money at once.

This obligation to protect customer assets “is considered sacrosanct,” Robert Cook, director of the division of trading and markets at the Securities and Exchange Commission, told me this week. “It’s considered a sacred obligation.”

Lehman Brothers may have engaged in many foolhardy practices, but even in the firm’s last days, when officials were desperate for cash, no one dared touch customer assets, which remained safely segregated despite the firm’s collapse.

And then came the revelation that an estimated $1.2 billion in customer assets had vanished at MF Global, the large brokerage and futures trading firm headed by Jon S. Corzine, the former Goldman Sachs executive and Democratic politician, that collapsed in late October after a catastrophic bet on European sovereign debt.

How could such a thing happen? I had always assumed it was impossible and that strict internal controls existed at all brokerage firms so that firm officials couldn’t tap segregated customer funds even if they were willing to break the law. Thanks to MF Global, it’s now apparent that isn’t necessarily true. “If people are determined to misuse customer funds, they will misuse them,” said Ananda Radhakrishnan, the director of the division of clearing and risk at the Commodities Futures Trading Commission.

That’s because the commodities and securities industry is mostly self-regulating, and self-regulation ultimately depends on the integrity of the regulated. Broker-dealers — securities firms that execute trades of stocks, bonds and other assets for customers — are overseen by the S.E.C., while futures commission merchants, which trade commodities, derivatives and futures, are regulated by the C.F.T.C. Like most large brokerage firms, MF Global was both a broker-dealer and a futures commission merchant, though its primary business was commodities futures trading.

The federal regulators issue and enforce the rules, but day-to-day oversight for securities firms is delegated to the Chicago Board Options Exchange, a for-profit company, and the Financial Industry Regulatory Authority, or Finra, a nonprofit organization financed by the brokerage industry. For commodity dealers, it’s the National Futures Association and the Chicago Mercantile Exchange. They conduct periodic examinations and audits and, in addition, member firms are required to have internal controls and compliance mechanisms to make sure that customer assets remain safely segregated at all times.

Typically, this requires transfers from segregated accounts (other than at the customer’s request) to be approved by multiple officials, including in many cases, the firm’s chief financial officer and chief compliance officer.

“It’s not a low-level functionary,” a regulator said. “It’s someone who has real standing. Most customer assets are held at the biggest firms and they have scores of people involved in this process.”

Susan Thomson, a spokeswoman for Merrill Lynch, the nation’s largest brokerage firm, said that any transfer from segregated accounts there required “at least three checks and possibly more.” Officials from operations, regulatory reporting and collateral are usually involved and sometimes compliance officials, as well. “There are multiple streams of responsibility. You have management accountability in each of those streams on a daily basis,” she said.

MF Global also had internal controls and a chief compliance officer, which raises the question: How did the customer assets ever leave the segregated accounts to begin with? In testimony on Capitol Hill on Thursday, Mr. Corzine only added to the mystery. He said that transferring customer funds was “a complex process” and, asked who could execute such a transfer, said “I wouldn’t know probably who that person is.”

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DealBook: Money Found in Britain May Belong to MF Global

Jon S. Corzine, center, was chief executive of MF Global, which could be missing as much as $1.2 billion in client money.David Goldman for The New York TimesJon S. Corzine, center, was chief executive of MF Global, which could be missing as much as $1.2 billion in client money.

About $200 million in customer money that vanished from MF Global is believed to have surfaced at JPMorgan Chase in Britain, according to people briefed on the matter. The discovery could be the most significant breakthrough in a monthlong hunt for the missing funds.

During MF Global’s last chaotic days, the brokerage firm overdrew an account at JPMorgan, according to another person who is close to the matter. Some investigators now believe the firm used customer funds to patch at least some of the hole, which would have been a significant breach of federal law.

MF Global transferred the roughly $200 million in the days before the firm filed for bankruptcy, said the people, who requested anonymity because the investigation was incomplete.

Some investigators suspect that the transfer to JPMorgan was the first major misuse of customer money at MF Global, the commodity brokerage powerhouse once run by Jon S. Corzine, the former Democratic governor of New Jersey. Authorities are also looking into whether JPMorgan initially questioned the source of the cash and sought proof from MF Global that it was complying with regulations, one of the people said.

The authorities believe MF Global failed to give JPMorgan full documentation for the cash, the people briefed on the matter said. But the bank’s concerns hardly mattered because the money had already been transferred to the account in Britain. It is unclear whether investigators can recover the $200 million.

Representatives for both MF Global and JPMorgan declined to comment. A spokesman for the MF Global trustee, James W. Giddens, declined to comment.

JPMorgan has long been thought to hold some of the money that disappeared from MF Global. As one of MF Global’s primary banks, JPMorgan has been a persistent presence in the firm’s demise and the messy aftermath. The bank loaned to MF Global until its waning days and has been a vocal and tenacious presence as a creditor during the firm’s bankruptcy hearings.

Rumors circulated briefly this month that the missing money had turned up at the bank. The reports were dispelled later in the same day, however, when investigators disclosed those funds had already been accounted for.

Some of the funds MF Global used to shore up its account with JPMorgan may have been legitimately transferred. Firms often keep a cushion of cash to protect customer accounts, which they are allowed to tap with certain restrictions. While the firm ultimately blew through that buffer, it is unclear when that happened and if MF Global intentionally used customer money.

Some industry lawyers liken JPMorgan’s role in the MF Global bankruptcy to the bank’s position in the messy collapse of Lehman Brothers, albeit on a smaller scale. As the nation’s largest bank, JPMorgan is intimately involved in many large bankruptcies. In 2008, as Lehman Brothers was struggling to survive, JPMorgan officials demanded several billion dollars in collateral to meet margin calls. Lehman acquiesced, severely draining its liquidity.

In the case of MF Global, the process is further complicated since the roughly $200 million is believed to be in Britain, which has its own bankruptcy rules.

The transfer came after a relatively routine overdraw of an account MF Global held at the bank, the person close to the matter said. JPMorgan systems picked up the shortfall and sent an automated message to MF Global, said the person, who requested anonymity because the information was private. The firm complied with JPMorgan’s request and transferred the money, the person said.

After receiving the money, JPMorgan raised questions about its origins but received few answers. Some investigators suspect that MF Global transferred the customer money to another unit of the firm and mixed it with the company’s capital before sending it to JPMorgan.

Such a transaction would have masked that it was customer money. It also would have violated a guiding principle of the futures industry: never mingle customer money with firm money.

The roughly $200 million that is believed to be at JPMorgan is a fraction of the money thought to be missing. The total amount of cash that is unaccounted for is itself the source of much debate.

Shortly after Oct. 31, when the firm filed for Chapter 11, authorities suspected that about $600 million in customer cash was nowhere to be found. Last week, Mr. Giddens’s office put the number at $1.2 billion. Some regulators and the CME Group, the exchange where MF Global did much of its business, have disputed the larger estimate.

The missing money has prompted a wide-ranging federal investigation. The Commodity Futures Trading Commission is leading the search for the cash while the Federal Bureau of Investigation and federal prosecutors in New York and Chicago are examining potential criminal wrongdoing.

Neither the firm nor Mr. Corzine has been accused of wrongdoing. The lengthy search is owed in part to shortcomings in MF Global’s recordkeeping .

Representatives for the F.B.I. and the C.F.T.C. declined to comment.

Next month, a pair of Congressional committees will examine MF Global’s collapse, which came after investors and customers fled the firm amid worries over its risky wagers on European sovereign debt. The Senate Agriculture Committee will hold the first hearing on Dec. 13, followed by the oversight panel of the House Financial Services Committee on Dec. 15.

For the first time, lawmakers are looking to publicly question Mr. Corzine, who spent five years on Capitol Hill as a Democratic senator from New Jersey. He resigned as head of the firm earlier this month. In addition, they hope to call as a witness MF Global’s chief operating officer, Bradley Abelow, who served as Mr. Corzine’s chief of staff when he was governor of New Jersey. Mr. Abelow and Mr. Corzine have not responded to the request from lawmakers on the House committee, according to a person with knowledge of the matter who was not allowed to speak publicly. It is unclear if the two men will agree to attend.

The deadline for a response is approaching. Should Mr. Corzine and Mr. Abelow decline, the committee can subpoena the executives.

Susanne Craig, Michael J. de la Merced and Eric Dash contributed reporting.

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DealBook: As Regulators Pressed Changes, Corzine Pushed Back, and Won

Jon Corzine, a former governor and senator, attended a dinner with his wife, Sharon, at the White House in June. Before MF Global’s collapse, Mr. Corzine was influential in Washington.Manuel Balce Ceneta/Associated PressJon Corzine, a former governor and senator, attended a dinner with his wife, Sharon, at the White House in June. Before MF Global’s collapse, Mr. Corzine was influential in Washington.

Months before MF Global teetered on the brink, federal regulators were seeking to rein in the types of risky trades that contributed to the firm’s collapse. But they faced opposition from an influential opponent: Jon S. Corzine, the head of the then little-known brokerage firm.

As a former United States senator and a former governor of New Jersey, as well as the leader of Goldman Sachs in the 1990s, Mr. Corzine carried significant weight in the worlds of Washington and Wall Street. While other financial firms employed teams of lobbyists to fight the new regulation, MF Global’s chief executive in meetings over the last year personally pressed regulators to halt their plans.

The agency proposing the rule, the Commodity Futures Trading Commission, relented. Wall Street, which has been working to curb many financial regulations, won another battle.

Yet with MF Global in bankruptcy and regulators scrambling to find $630 million in missing customer funds, Mr. Corzine’s effort may come back to haunt him.

The proposed rule would have restricted a complicated transaction that allowed MF Global in essence to borrow money from its own customers. Brokerage firms are allowed to use customers’ money to earn interest, not unlike banks, but this rule would have outlawed using customer funds for a loan to the firm itself.

While such financing is not unknown on Wall Street, it carries substantial risk. An outside lender would require a firm like MF Global to produce strict accounting for a loan. Without that oversight, regulators worried that firms could use such internal customer money inappropriately, including bolstering the business in hard times. The proposed rule would have affected several dozen other financial firms.

Regulators are now examining whether these transactions explain the missing money at MF Global, according to people briefed on the investigation.

The C.F.T.C. has issued subpoenas to MF Global’s auditor, PricewaterhouseCoopers, and the Securities and Exchange Commission is also conducting an inquiry. The Federal Bureau of Investigation is also looking into the missing money, although there is no indication that criminal laws were broken.

Still, Mr. Corzine has hired a prominent criminal defense lawyer, Andrew J. Levander, a partner at Dechert, according to people briefed on the matter.

Mr. Levander represented a number of Wall Street executives after the financial crisis of 2008, including the independent directors of Lehman Brothers and John A. Thain, the former chief executive of Merrill Lynch.

Neither Mr. Corzine nor MF Global has been accused of wrongdoing. MF Global declined to comment and Mr. Corzine did not respond to a request for comment.

Just three months ago, Mr. Corzine’s firm assured regulators that the proposed rule could cripple the futures brokerage industry by hurting their profitability. In a letter, MF Global told regulators that they were trying to “fix something that is not broken,” adding that the firm was not aware of any brokerage firm like itself that was unable to “provide to their customers upon request any segregated funds.”

MF Global’s clients, including hedge funds, individual investors and agricultural firms, now know a different reality, as the clients struggle to locate their missing funds. And regulators are pushing to again move forward on the rule. But for MF Global, the rule will come too late.

The trades at the center of MF Global’s downfall — big bets on the debt of five European countries — may yet prove profitable. But they raise questions about why the firm escalated its risk-taking under Mr. Corzine, leading to a crisis of confidence among rating agencies, creditors and regulators.

As a former sovereign debt trader at Goldman Sachs, Mr. Corzine wagered that the European regulators would backstop any default. So even as dark clouds circled over Europe, he sensed an opportunity. Starting in late 2010, MF Global began to accumulate short-term sovereign debt of countries like Italy, Spain and Portugal.

MF Global financed these purchases through complex transactions known as repurchase agreements. In these, the bonds themselves were used as collateral for a loan to purchase them. The interest paid on that loan was less than the interest the bonds paid out, earning the firm a profit from the spread.

While that practice is quite common, the C.F.T.C. wanted to crack down on such lending in those instances when customer funds were used. The C.F.T.C. proposal would have also banned the use of client funds to buy foreign sovereign debt.

It is unclear whether the firm used client funds to purchase the risky bonds of Italy, Spain, and other debt-laden European nations, but experts say it is not unusual for such transactions to be paid for with customer money.

A person close to MF Global said the firm did not use client funds to finance these trades.

Leading the government’s effort to curtail these arcane practices was Gary Gensler, the chairman of C.F.T.C., who had worked for Mr. Corzine at Goldman Sachs. Mr. Gensler pushed for the proposed change in October 2010, and planned to bring it to a vote this summer.

MF Global has four outside lobbyists in Washington, tiny by Wall Street standards. But it was Mr. Corzine who marshaled the firm’s response to the proposal, lobbying most of the agency’s five commissioners directly. One commissioner said he visited with Mr. Corzine in MF Global’s headquarters, and acknowledged being impressed by the Wall Street titan, said a person with direct knowledge of the meeting who asked for anonymity because the meeting was private.

The C.F.T.C. polices the markets for futures trades. Staff members there often do not have a Wall Street pedigree.

Mr. Corzine’s background in finance made him highly credible, agency officials said.

Mr. Corzine’s efforts culminated on July 20, as the agency was preparing for a vote on the proposal. That day, MF Global executives were on four different calls with the agency’s staff. Mr. Corzine himself was on two of those calls.

One of the calls was with Mr. Gensler. Both men are active Democrats, and served on financial panels together recently.

Shortly after the calls, Mr. Gensler, aware that he could not push the vote through, decided to delay the proposal indefinitely.

But after MF Global’s blowup and the ensuing fallout from the missing funds, regulators said they were considering pushing again on the rule.

“I think it’s time to move ahead — expeditiously — and make that rule tighter, cleaner, and ultimately safer, for customers,” Bart Chilton, a Democratic member of the C.F.T.C., said in a statement.

Mr. Chilton also wants the agency to require firms to produce detailed documentation “to ensure that the funds are really there.”

Internal repurchase agreements emerged on Wall Street in 2005. At the time, the transactions were off limits to banks and brokerage firms. But at the urging of Lehman Brothers, the C.F.T.C. blessed the new approach to getting financing.

In September 2008, Lehman collapsed amid a global financial crisis. It later was disclosed that Lehman’s use of another little-known repurchase agreement allowed it to temporarily obscure billions of dollars in losses.

Michael J. de la Merced, Andrew Ross Sorkin and Peter Lattman contributed reporting.

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