* "Corzine rule" requires top execs to approve withdrawals
* Brokers must notify regulators before large withdrawals
* Must also submit daily segregated fund calculations
* Rules come as a response to MF Global collapse
* Also come same day PFGBest founder arrested
(Adds rule details, background throughout)
By Sarah N. Lynch
WASHINGTON, July 13 U.S. futures regulators
approved new regulations on Friday to shore up protection of
brokerage customer funds following last year's collapse of MF
The Commodity Futures Trading Commission approved the rule
on the same day that Russell Wasendorf Sr., the founder of
another failed brokerage firm, PFGBest, was arrested on fraud
charges in connection with allegedly misappropriating customer
Friday's new final rules address the kinds of problems that
have been seen at both MF Global and PFGBest, where customer
money was not properly segregated.
In the case of MF Global, an estimated $1.6 billion in
customer money went missing.
MF Global, which was led by former New Jersey Governor and
U.S. Senator Jon Corzine, collapsed in October after investors
and customers became rattled over its multibillion-dollar bet on
European sovereign debt and downgrades by credit rating
agencies, resulting in a liquidity crunch.
A measure known as the "Corzine rule" would require top
executives at futures brokers to sign off on major withdrawals
from customer accounts. A major withdrawal would be considered
anything more than 25 percent of a customer's excess funds.
It was developed in response to Corzine saying he had no
direct knowledge of money transfers made by the firm.
Other new rules approved on Friday include requirements for
future brokers to have written policies governing the
maintenance of excess funds.
Those brokerages would also have to notify regulators before
withdrawing 25 percent or more of the excess customer funds, and
they would also have to file daily reports on segregation
computations, among other new requirements.
Friday's regulations were approved at the request of the
National Futures Association, the self-regulatory futures group.
The NFA has come under scrutiny this week, after the CFTC
filed a civil complaint against Iowa-based PFGBest and Wasendorf
following the discovery of more than $200 million in missing
customer money. The NFA was the primary day-to-day regulator for
The massive fraud at PFGBest was uncovered in a signed note
that Wasendorf left when he tried to commit suicide on Monday
morning in his car in the parking lot of PFGBest's
headquarters. The firm filed for bankruptcy on Tuesday.
(Reporting By Sarah N. Lynch and Alexandra Alper; Editing by