Judicial Watch Sues Obama Administration for Records about the Failure of Scandal-Ridden Bankrupt MF Global Holdings Ltd.
AUGUST 07, 2012
(Washington, DC) – Judicial Watch, the public interest group that investigates and fights government corruption, announced today that on July 18, 2012, it filed a Freedom of Information Act (FOIA) lawsuit (Vern McKinley v. Commodity Futures Trading Commission and Securities and Exchange Commission (No. 1:12-cv-01176)) against the Securities Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) seeking records related to internal discussions involving the bankrupt company MF Global Holdings Ltd. Judicial Watch’s FOIA lawsuit, filed on behalf of Vern McKinley, focuses specifically on an October 31, 2011, meeting of the Treasury Department’s Financial Stability Oversight Council (FSOC), during which MF Global was reportedly discussed. McKinley is a former employee of the Board of Governors of the Federal Reserve and the Federal Deposit Insurance Corporation and author of Financing Failure: A Century of Bailouts.
Judicial Watch seeks the following records from both the SEC and the CFTC pursuant to the original April 24, 2012, FOIA requests:
…copies of any and all records concerning this update of MF Global, the discussion of the implications for the broader financial system, and any follow up contact and discussions on public statements. Such records include, but are not limited to, detailed meeting minutes, meeting notes, supporting memoranda, communications, and electronic messages and attachments.
The CFTC acknowledged receiving the FOIA request on April 25, 2012, and was required to issue a final response by May 23, 2012. To date, the CFTC has failed to respond to the request in accordance with FOIA law.
The SEC acknowledged receiving the FOIA request on April 25, 2012, and was required to issue a final response by May 23, 2012. To date, the SEC has failed to respond to the request in accordance with FOIA law. (The SEC indicated in an interim response on May 18, 2012, that it had uncovered a two-page document responsive to Judicial Watch’s request, but withheld the document in full.)
The FSOC was established under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Council is charged with “identifying threats to the financial stability of the United States; promoting market discipline; and responding to emerging risks to the stability of the United States financial system.”
Per Reuter’s, on October 31, 2011, the FSOC held a conference call to discuss MF Global Holdings Ltd. the same day the company filed for bankruptcy: “The Financial Stability Oversight Council, which is headed by the Treasury Department, received ‘a series of oral reports’ from the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Federal Reserve, the official said. No other details of the call were provided.” Judicial Watch and Mr. McKinley have been sharply critical of the FSOC for failing to anticipate the MF Global meltdown in accordance with its congressional mandate.
MF Global was forced to file bankruptcy after what has been described as “one of the most egregious violations of trust on Wall Street.” The company allegedly stole $1.6 billion from customer accounts in an attempt to cover the company’s losses and lied to bondholders about the financial condition of the company. Former U.S Senator and New Jersey Governor John Corzine was forced to resign as CEO for MF Global for his alleged role in the improprieties at the company.
“The FSOC is yet another expensive bureaucratic boondoggle that has failed to provide the financial stability and oversight promised by its congressional mandate. The American people deserve to know the truth about what FSOC officials knew about the epic failure of MF Global and when they knew it. But once again, the Obama administration refuses to provide basic information related to its ‘oversight’ of the private sector,” stated Judicial Watch President Tom Fitton.
Judicial Watch has launched a comprehensive investigation to determine under what legal authorities and lawful rationales the federal government initiated the Wall Street bailouts and has filed a number of lawsuits on behalf of Mr. McKinley. More information is available in Judicial Watch President Tom Fitton’s new national and New York Times bestselling book, The Corruption Chronicles.