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April 24, 2012

UNOFFICIAL TRANSCRIPT: Sen. Johanns Questions Witnesses About MF Global's Collapse

Johanns: Mr. Giddens or Judge Freeh, either one of you may be equipped to answer this. I am trying to get a perspective here, just in terms of time. You said Mr. Giddens that when former Senator Corzine came on board there were problems with this firm; they had liquidity problems and that sort of thing. And as I understand it that would have been in the scope of two hundred million dollars at that point in time, is that what you found?

Johanns: That is what I was trying to get at here, is that everything I have heard through hearings like this and reading testimony, etc., is that in the final weeks of MF Global, the sky fell in. Now, my understanding, to me it seems so basic, even having been a lawyer where you maintain a trust account. Someone gives you money you put it in the trust account, you are not authorized to say, “gosh, kind of a rough month this month, clients aren’t paying their bills, or whatever, so I’ll just borrow money out of the trust account.” That is in effect what they did here, right?

Johanns: Did you come across any indication that the firm was actually using that approach, in a way that you personally would regard or you would offer an opinion, that that was deceptive, it was done in a way to deceive people who were suppose to be paying attention to this or regulating this?

Johanns: Let me ask a question then about that. You are going into this time of a personal investigation is what you said Judge Freeh, and you are going to start trying to uncover who did what and when, and that sort of thing. So what are your options? If you see evidence that that practice was done in a deceptive way, just describe for the committee the three or four things that could happen to the principles here?

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