A plan to ban Jon Corzine, the former chief executive of MF Global, from the futures industry for life for failing to protect the failed brokerage’s customers faces an uphill battle at a key industry regulator.

Two newly elected members of the National Futures Association (NFA) board have proposed barring Corzine, the former New Jersey governor who led the broker when it failed in October 2011. The board is set to discuss the plan at a quarterly meeting in Chicago on Thursday.

Other NFA officials are hesitating to back the motion out of fear it may interfere with a probe by another regulator, the U.S. Commodity Futures Trading Commission (CFTC).

“The last thing you want to do is … jeopardize somebody else’s ongoing investigation,” said Scott Cordes, an NFA board member.

Even without a lifetime ban, the NFA probably would try to prevent Corzine from doing business in the industry “in light of everything that is still to be sorted out,” Cordes said.

Cordes, president of Country Hedging, said he wanted to discuss the proposed ban with the board before taking a position.

No one has been charged in MF Global’s collapse, although U.S. congressional investigators have determined that Corzine failed to maintain the systems and controls necessary to protect customer funds.

The futures broker failed after dipping into customer accounts in violation of industry rules.

The CFTC, which oversees both swaps and futures markets, has yet to finish an investigation into MF Global’s downfall, which left a $1.6 billion hole in its customers’ accounts and shook confidence in the futures industry.

A CFTC spokesman declined to comment.

NFA Chairman Chris Hehmeyer also declined to comment, saying he had not seen the motion.

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.

Marc Nagel, who sits on an NFA nominating committee but not on the board of directors, said he could not immediately support a ban.

“Everybody, no matter how much you might dislike them, is entitled to his day in court,” said Nagel, chief operating officer of Dorman Trading.

A spokesman for Corzine, who is not currently registered with the NFA, declined to comment.

The two new NFA board members, James Koutoulas and John Roe, want NFA’s business conduct committee to hold a hearing for Corzine and ban him for life if he is found guilty of not properly protecting funds of MF Global clients.

“We want a hearing to consider the publicly available information,” Koutoulas said. “Thus the CFTC can’t complain that we’re compromising any investigation.”

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.

“The NFA has a responsibility to its membership to say our rules were violated,” Roe said. “We need to do something to reassure the market that the wheels of justice here are turning.”

(Reuters)