Jason Reed/ReutersRepresentative Randy Neugebauer, who is chairman of the House Financial oversight panel.MF Global employees at the center of a federal investigation are expected to appear before a Congressional panel this month to shed light on the brokerage firm’s misuse of roughly $1 billion in customer money, according to people briefed on the matter.
One notable employee, Edith O’Brien, is expected to invoke her constitutional right against compelled self-incrimination, one of the people said. Ms. O’Brien has also declined to cooperate with federal prosecutors without first receiving immunity from criminal charges.
Ms. O’Brien would be the first MF Global employee to invoke her Fifth Amendment rights before Congress, potentially setting up a standoff with lawmakers.
The oversight panel of the House Financial Services Committee, which is planning to hold the hearing on March 28, has also contacted lawyers for Christine Serwinski and Christy Vavra, MF Global employees in Chicago who worked in the firm’s treasury operations. It is unclear whether they will appear at the public hearing or simply agree to private interviews with the committee’s staff members.
Laurie Ferber, the firm’s general counsel who is based in its Manhattan headquarters, has been mentioned as another potential witness, one of the people briefed on the matter said.
These people, who spoke on the condition of anonymity because the witness list was not yet final or public, said that Congressional officials were still in talks with lawyers for the potential witnesses. Details of the hearing could still change.
Congress has spent nearly five months examining the Oct. 31 bankruptcy of MF Global, holding four previous hearings on the collapse of the firm and the $1.6 billion shortfall in customer money. The same House panel held hearings in December and February featuring testimony from Jon S. Corzine, the firm’s former chief executive who was once the governor of New Jersey, the firm’s regulators and its former risk managers.
Mr. Corzine has denied knowing that the firm was tapping customer accounts to meet its own obligations. Customer cash was supposed to be off-limits to MF Global.
“I never gave any instructions to misuse customer money, never intended to give any instructions or authority to misuse customer funds, and I find it very hard to understand how anyone could misconstrue what I’ve said as a way to misuse customer money,” Mr. Corzine said in December before the Senate Agriculture Committee.
No one at MF Global — including Ms. O’Brien, Ms. Vavra, Ms. Serwinski, Ms. Ferber and Mr. Corzine — has been accused of any wrongdoing. Ms. Serwinski may have few insights into the days before the firm’s collapse. She spent that last week on vacation, returning around 9 p.m. on Sunday, Oct. 30, just hours before the firm filed for Chapter 11 bankruptcy protection.
A lawyer for Ms. Serwinski declined to comment.
The collapse of MF Global, and the revelation of the missing money, ignited national outrage and a hunt for the money. James W. Giddens, the trustee responsible for returning cash to MF Global’s commodity clients, has traced most of the missing money to the firm’s banks, trading partners and even its securities customers.
But MF Global’s commodity customers — including farmers, hedge funds and other investors — have recovered only 72 percent of their money.
On Thursday, Mr. Giddens asked a bankruptcy court judge for permission to distribute about $600 million, expanding the payouts to 82 percent.
Customers unwilling to wait for the complex bankruptcy process to run its course have a backup plan: sell their claims to one of several Wall Street firms. Barclays Capital, the investment banking arm of the London-based bank, has agreed to buy most claims for 90 percent of face value. The Royal Bank of Scotland has offered 91 percent to MF Global’s institutional clients.
Less movement is happening in the criminal investigation. The Federal Bureau of Investigation, federal prosecutors in New York and Chicago and the Commodity Futures Trading Commission, who are sorting through thousands of internal documents and e-mails, have not found a smoking gun, people involved in the case have said.
While regulators still aim to file civil enforcement actions, a criminal case would require that prosecutors prove that MF Global employees intended to defraud customers. Instead, some investigators suspect that chaos and poor risk control systems were to blame.
Still, the investigation is in its early stages. Authorities, for instance, have yet to hear from Ms. O’Brien, who is declining to cooperate.
Her name first surfaced at a Congressional hearing in December, when Mr. Corzine tried to explain the firm’s actions that final week. Ms. O’Brien, Mr. Corzine said, was charged with replenishing an account that MF Global overdrew on Oct. 28 at JPMorgan Chase, the firm’s main bank.
Federal investigators suspect that Ms. O’Brien, perhaps inadvertently, then transferred about $200 million in customer money to JPMorgan. She was following orders from her superiors in the firm’s New York office, people briefed on the matter have said.