* Edith O'Brien was involved in MF Global fund transfers
* Refused to testify before Congress on her role
* O'Brien appeared at CFTC in 2010 defending safeguards
* Said customer safeguards work "extremely well"
By Sarah N. Lynch and Aruna Viswanatha
WASHINGTON, April 13 (Reuters) - MF Global's assistant treasurer, now a key figure in the mystery over the bankrupt firm's missing customer money, praised how well customer safeguards work one year before the firm's collapse.
Edith O'Brien was a panelist at a Commodity Futures Trading Commission public meeting held on Oct. 22, 2010, to discuss the protection of individual customer funds, especially if a customer defaults.
According to a transcript of the meeting, O'Brien told the other panelists that they were taking "an extraordinarily myopic view of the current safeguard structure that operates in America and has effectively worked to the best of my knowledge for years."
O'Brien appears to have played a critical role in the firm's final days, as the futures brokerage suffered a liquidity crisis and desperately shifted funds before filing for bankruptcy on Oct. 31, 2011.
Investigators including the CFTC and Justice Department are probing why more than $1 billion in customer funds are missing, and whether the firm raided customer money to meet the firm's needs - a major violation of industry rules.
Former MF Global Chief Executive Jon Corzine has specifically named O'Brien as someone who gave him assurances that fund transfers were proper.
O'Brien has not spoken publicly about her version of events, and invoked her constitutional right against self-incrimination at a congressional hearing last month.
Neither the firm nor its executives have been formally charged with wrongdoing.
At the 2010 CFTC meeting, O'Brien went on to say that there are multiple layers of safeguards for customer funds, including rules segregating customer funds from firm funds, and rules restricting what firms can do with customer funds while they are holding them.
"So, as we continue the conversation this afternoon, I want everyone to consider the fact that there's a greater framework at hand here, one that has actually worked extremely well," she said according to a transcript on the CFTC's website.
A lawyer for O'Brien declined to comment about O'Brien's remarks at the CFTC meeting.
BATTLE OVER PROTECTIONS
The CFTC was holding the roundtable, in part, to discuss a requirement in the 2010 Dodd-Frank financial oversight law that calls for firms to legally protect each individual account for swaps customers, and not just protect a pool of accounts.
How to devise such a customer fund protection scheme for swaps was a major source of contention.
At the CFTC's roundtable in 2010, futures brokerages like MF Global argued for using the customer fund protection model used in the futures market, where all of the customer money is pooled together in "omnibus" accounts.
But pension funds and money managers have strongly opposed that idea, saying that pooling the money together puts customer collateral at risk. They have argued in favor of having individual, separate customer accounts.
Futures brokerages have pushed back against individual account segregation, with the Futures Industry Association arguing it could cost firms nearly $100 million a year.
The CFTC struck a compromise and finalized a rule earlier this year that allowed for firms to pool swaps customer funds together, but with strong record-keeping requirements to identify the accounts.
On another proposal regarding stricter customer safeguards, Corzine, a former U.S. senator and a governor of New Jersey, personally lobbied the CFTC.
He participated in phone calls in which he warned about a proposal to put tighter limits on "in-house" transactions in which futures brokerages use customers' funds to make proprietary trades for their own accounts.
MF Global and other industry players succeeded in delaying the proposal, which the CFTC ended up finalizing in December, after MF Global collapsed. (Reporting By Sarah N. Lynch and Aruna Viswanatha; Editing by Karey Wutkowski and Tim Dobbyn)