A U.S. futures-market regulator said it will block Jon Corzine, the former chief executive of failed broker MF Global, from the industry unless he clears an investigation into his fitness as a participant.
However, the National Futures Association, which oversees brokers and asset managers, rejected a proposed lifetime ban for Corzine for now.
Publicly available information "raises issues" about Corzine's fitness for membership, NFA Chairman Chris Hehmeyer said in a statement after a board meeting in Chicago.
Corzine, whose NFA membership has lapsed, will not be granted membership "unless NFA, after completing its fitness investigation, resolves those issues to its satisfaction," Hehmeyer said.
MF Global failed in October 2011 after dipping into customer accounts in violation of industry rules, leaving a $1.6 billion hole in its customers' accounts and shaking confidence in the futures industry.
No one has been charged in MF's collapse, although U.S. congressional investigators have determined that Corzine failed to maintain the systems and controls necessary to protect customer funds.
NFA took a stance on Corzine after two newly elected members of its board proposed banning Corzine from the industry for life for failing to protect customers' funds.
The board, at its closed-door meeting in Chicago, decided not to pursue the lifetime ban because members did not want to interfere with other agencies probing MF Global's downfall, Hehmeyer said.
NFA could still slap Corzine with a permanent ban and fines later, he said.
The U.S. Commodity Futures Trading Commission, which oversees futures and swaps markets, is investigating the collapse. CFTC has declined to comment.
A spokesman for Corzine also has declined to comment.
'Too Little, Too Late'
The NFA, based in Chicago and funded by industry fees, has traditionally operated in relative obscurity, overshadowed by better-known market regulators like the CFTC and the U.S. Securities and Exchange Commission.
Its pledge to reject Corzine, if he applies for membership and fails the fitness test, struck some former MF Global customers as weak. They also said they did not understand why it took the NFA 15 months to act.
"It's too little, too late," said Kansas cattle rancher Tim Rietzke, who had about $30,000 stranded in an MF Global account when the firm collapsed.
Rietzke said he has received back about 80 percent of his money but still lacks confidence in the industry because of MF Global's downfall.
The NFA looks "gutless" for not taking stronger action sooner, said Doug McClelland, a recently retired commodities broker who worked with clients whose money was frozen in MF Global's collapse.
The two new NFA board members, James Koutoulas and John Roe, had wanted NFA's business conduct committee to hold a hearing for Corzine and ban him for life if he was found guilty of not properly protecting funds of MF Global clients.
Koutoulas and Roe co-founded the Commodity Customer Coalition in late 2011 to help MF Global's former customers get their money back; they now want the NFA to take the lead as an advocate for customers.
Both declined to comment after the meeting, citing a board confidentiality policy.