Article originally appeared on MarketWatch.com on November 25, 2011.

By Jamila Trindle

–Coalition of MF Global customers lobbies Washington to help them get money back

–Futures industry considers an insurance fund

–Regulators to take lawmaker questions in hearings on Dec. 5 and Dec. 15

(Updates to add CFTC not returning request for comment in paragraph seven and comments from CME Group and NFA in paragraphs 12 to 14)

WASHINGTON (MarketWatch) — MF Global Holdings Ltd. MFGLQ +48.65% customers are preparing to bring their grievances over the firm’s failure to Washington.

“There wasn’t anybody who was advocating for customers,” said John Roe, a principal with BTR Trading Group, who has started a group called the Commodity Customer Coalition.

The group, which represents customers who hold more than 7,000 MF Global accounts, is revving up a lobbying effort as Congress prepares to grill regulators on the MF Global bankruptcy and a shortfall of customer funds that could total $1.2 billion, twice what was originally thought. It also could turn to the courts as part of its effort to get customer funds back.

Roe, who trades for clients and on his own account, said he has over $10 million of his own money and his clients’ money still stuck in MF Global.

One complaint Roe has is with how the Commodity Futures Trading Commission is handling the fund recovery process. He said the agency shouldn’t have turned to the Securities Investor Protection Corporation trustee because SIPC is designed to protect securities customers.

“They didn’t protect customers, they actually threw us to the wolves in bankruptcy,” Roe said of SIPC.

A CFTC spokesman did not return a request for comment on Roe’s complaint.

SIPC provides insurance to securities customers in the event of a broker-dealer failure where there is a shortfall in customer funds, but there is no equivalent for the futures industry.

Donald Horwitz, an attorney with compliance and regulatory consultancy Oyster Consulting LLC, said maybe the futures industry needs a similar entity.

“Maybe it’s time for the CFTC to look at this: having an insurance fund in the event the money in the customer funds account is improperly used,” Horwitz said.

Horwitz said that the futures industry has argued against insurance because futures firms have always properly managed customer money. But in light of MF Global, he says that now seems to be a false premise.

An insurance fund is certainly part of the discussion about what should be done in the wake of MF Global, said Dan Driscoll, chief operating officer of the National Futures Association, a self-regulatory body for the industry.

“One of the arguments against having an insurance program is that just to administer it costs money and ultimately those costs get passed on to customers,” Driscoll said.

A spokesman for exchange-operator CME Group Inc. (CME) said that the industry is “considering a number of solutions to increase customer protections at the firm level.”

CFTC Commissioner Jill Sommers, the top agency official overseeing the investigation, said it’s premature to consider changes to futures regulations before the investigation is complete.

Ronald Filler, a law professor at the New York Law School, said the MF Global shortfall in customer funds is unprecedented, but that it doesn’t necessarily mean the rules need to be changed.

Filler, who came back from retirement to help his former employer Lehman Brothers transfer futures accounts in September 2008, said the current rules to handle this kind of failure work well and much better than in other countries.

“If it was fraud, what procedures in the world would have kept fraud from occurring?” he said.

Regulators are likely to hear questions on their oversight of MF Global and fund recovery efforts at a congressional hearing next week.

CFTC Chairman Gary Gensler and SEC Chairman Mary Schapiro are scheduled to testify before the Senate Agriculture Committee on Dec. 1. A House Financial Services subcommittee will hold another hearing on MF Global, to which they have invited regulators as well as former MF Global chief executive Jon Corzine, on Dec. 15.

Roe said he is appealing to lawmakers to add his group to the list of speakers for the Dec. 15 hearing.