The Commodity Futures Trading Commission obtained a federal court consent order this week, requiring MF Global to pay $1.2 billion in restitution to customers—the amount of money it lost before going bankrupt in October 2011.

The consent order, entered on Nov. 8 by U.S. District Court Judge Victor Marrero of the U.S. District Court for the Southern District of New York, also imposes a $100 million civil monetary penalty on MF Global. This penalty is expected to be paid after MF Global has fully paid customers and certain other creditors entitled to priority under bankruptcy law, the CFTC stated.

In a prepared statement, Gretchen Lowe, acting director of the CFTC's Division of Enforcement, stated, “The CFTC will continue to ensure that those who violate U.S. commodity laws and regulations designed to protect customer funds will be vigorously prosecuted.”

The consent order arises out of a complaint the CFTC filed on June 27, 2013 based on charges that MF Global and other defendants unlawfully used customer segregated funds to support its own proprietary operations and the operations of its affiliates. The CFTC's complaint charged MF Global, a registered Futures Commission Merchant (FCM), with violating provisions of the Commodity Exchange Act and CFTC regulations designed to protect customer funds and require diligent supervision by registrants.

In addition to the misuse of customer funds, the complaint alleged that MF Global:

Unlawfully failed to notify the CFTC immediately when it knew or should have known of the deficiencies in its customer accounts;

Made false statements in reports it filed with the CFTC that failed to show the deficits in the customer accounts;

Used customer funds for impermissible investments in securities that were not considered readily marketable or highly liquid in violation of CFTC regulation, and

Failed to diligently supervise the handling of commodity interest accounts carried by MF Global and the activities of its partners, officers, employees, and agents.

A 174-page report on MF Global, published by the company's trustee in April, points to a compliance culture fraught with compliance deficiencies. “Before [MF Global] went public, it acquired several disparate companies it never properly integrated. As one subordinate wrote in April 2010, ‘There is little business or dispositional integration between the many offices and branches. There is, in short, no house culture.' The unwieldy corporate structure lacked cohesion both in its culture and in its operating structure,” the report stated.

The CFTC stated that its litigation continues against the remaining defendants: Jon Corzine, former chief executive officer of MF Global and MF Global Holdings, and Edith O'Brien, former assistant treasurer of MF Global.