Much of the discussion focusing on MF Global over the last few months has centered (quite understandably) on where the missing $1.2 billion in customer funds is.
But another important question sometimes gets overlooked: When exactly did the European trades that doomed the firm start, and why does everyone seem to have different opinions on it? Two different views will be presented in Congress today.
The former chief risk officer of MF Global says they started in the Summer of 2010 or before. The head of FINRA, a regulator, however, says the bet didn't start until the middle of September 2010.
Did the trades that doomed MF Global begin in the summer of 2010 or three months later?”
In prepared testimony for today's hearing on the collapse of the firm held by the House Financial Services Committee, former MF Global CRO Michael Roseman is expected to say there were European positions of less than $500 million on the books in March 2010. By July 2010, he is expected to say, he was asked to adjust the limits on these positions.
As the trade ramped up, he and former MF Global Chief Executive Jon Corzine agreed on a limit of $1 billion, which was revised upward several times in Roseman's tenure.
Roseman grew concerned when the trades reached between $1.5 billion and $2 billion in September 2010 and expressed his concerns to Corzine and the board, according to his testimony.
Roseman was replaced as CRO by Michael Stockman, who is also testifying today.
Meanwhile, at least one of the regulators who looked at MF Global's books believes something different. FINRA Chief Executive Richard Ketchum testified in December that MF Global indicated in late September 2010 that the firm didn't have any exposure to European sovereign debt. Ketchum said FINRA regulators later found out that the firm actually "began entering into transactions that carried European debt exposure in mid-September 2010."
A person familiar with the matter says that information came from MF Global around the time the firm published its annual report in 2011.
Two people familiar with the matter said MF Global may have not admitted to the trades starting in the summer 2010 because they were booked through the firm's U.K. subsidiary throughout the summer. The trades were later transferred over to the U.S. when it became clear British capital and liquidity requirements would have been too high, one of these people said.
MF Global declined to comment.
Write to Julie Steinberg at Julie.Steinberg@dowjones.com
Write to Aaron Lucchetti at Aaron.Lucchetti@wsj.com