CFTC Votes Unanimously To Make Client Money Commingling Really Illegal This Time

In the aftermath of the MF Global fiasco, popular anger has understandable been focused on the complete lack of any response (let alone prevention) by regulators, in this case by Goldman's Gary Gensler, currently head of the CFTC, who quite comically had to recuse himself from an MF Global investigation due to his previous ties to Jon Corzine. So today, in a unanimous vote, "The U.S. futures regulator approved on Monday a rule that puts tighter limits on how brokerage firms can use customer funds, a measure that the now-bankrupt MF Global had encouraged the agency to delay." In other words, while before commingling client accounts was assumed to be a clear violation of every logical fiduciary imperative, now it is set in stone. For real. The CFTC means it. Said otherwise, clients can now rush back into the rigged casino and put their money because as of today illegal activity on behalf of futures dealers will really be illegal. Or else. And one wonders why there has been relentless outflows from anything remotely resembling retail capital in the past two years.

From Reuters:

The measure was finalized by the Commodity Futures Trading Commission by a 5-0 vote. The rule was initially proposed by the CFTC in October 2010.


The push to finalize the rule gained momentum after MF Global's collapse. The firm filed for bankruptcy on Oct. 31 after investors got spooked by its large bets on European sovereign debt. Regulators are still searching for hundreds of millions of dollars in missing customer money.

Supposedly this also means Corzine will never be questioned for anything, ever. After all the CFTC has now done its job.