(Reuters) -- A finance executive at MF Global Holdings Ltd invoked her right against self-incrimination Wednesday as lawmakers heard from officials who played critical roles in the final days of the futures brokerage, when a huge and still unexplained shortfall in customer money surfaced.

Assistant Treasurer Edith O'Brien, believed to have been involved in authorizing a $175 million transfer that may have included customer funds, three days before MF Global's bankruptcy filing on Oct. 31, declined to testify.

"On advice of counsel I respectfully decline to answer based on my constitutional right," she told subcommittee chairman Rep. Randy Neugebauer when asked whether she gave former MF Global Chief Executive Jon Corzine assurances that the fund transfer was proper.

She invoked her right not to testify in response to other questions from the oversight panel of the House Financial Services Committee before Neugebauer excused her.

"I am disappointed because of your answer because I believe that you have important knowledge," said Neugebauer, a Texas Republican.

The panel is examining why an estimated $1.6 billion of customer money has gone missing, and the extent to which Corzine and other officials might be responsible.

MF Global filed for protection from creditors after investors and customers became rattled over the firm's $6.3 billion bet on European sovereign debt and downgrades by credit rating agencies, resulting in a liquidity crunch.


Among those testifying at the hearing were MF Global general counsel Laurie Ferber; MF Global chief financial officer Henri Steenkamp; and Christine Serwinski, former chief financial officer of the company's brokerage unit.

The testimony painted a picture of funds desperately being shifted around in late October, but provided little comfort to thousands of former MF Global customers seeking the return of all their money. About $3.9 billion has been recovered so far.

There has so far been no smoking gun to suggest criminal intent, although federal investigators have been looking at whether any criminal wrongdoing might have taken place.

Corzine, a former Democratic senator and governor from New Jersey, has maintained that he "never intended" to break any rules and did not give instructions to misuse customer funds.

But panel members, including the ranking Democrat, Michael Capuano of Massachusetts, questioned the propriety of MF Global officials' actions.

"Apparently nobody did anything wrong, but there's a billion dollars missing," Capuano said. He later questioned whether the court-appointed trustee for MF Global, former FBI Director Louis Freeh, should be paying bonuses to top executives during the bankruptcy.

Investigators are looking at whether any of MF Global's $175 million transfer to a JPMorgan Chase & Co account on Oct. 28, three days before its Chapter 11 filing, represented money from customers. Raiding customer funds is a violation of federal regulations.

Diane Genova, JPMorgan's deputy general counsel, in written testimony for Wednesday said Corzine "assured" the largest U.S. bank that matters were being handled properly.

Corzine did not testify Wednesday. He had specifically named O'Brien on Dec. 15 before the same committee, saying she assured him that the transfer was proper.


Ferber said she resisted providing broad written assurance to JPMorgan that MF Global was complying with rules to segregate customer funds. She said a letter suggesting narrower language was drafted, but not signed.

Serwinski said in her written testimony that by Oct. 27 she was "not comfortable" with putting customer funds at risk even overnight, after having learned there had been a "substantial deficit" in one metric on the company's books the day before.

Under questioning, she told lawmakers she would not have approved the $175 million transfer had she known then what she knows now.

Oct. 26 is when James Giddens, the court-appointed trustee for the MF Global brokerage unit, said the customer funds shortfall became apparent and began to grow.

Genova, meanwhile, said in her prepared testimony that JPMorgan had noticed overdrafts in MF Global accounts on Oct. 28, but was assured by Corzine that the company had "ample" funds to cover them.

Addressing the overdrafts was needed so JPMorgan could run a $4.9 billion bond auction to give MF Global needed liquidity.

Genova also said that MF Global gave JPMorgan multiple oral assurances that it was complying with Commodity Futures Trading Commission rules on customer-segregated accounts.

MF Global had transferred $200 million from a customer-segregated account to an MF Global house account in the United States, and then $175 million from that U.S. account to an MF Global account at JPMorgan in London.

But company executives believe the largest U.S. bank, which handled much of the day-to-day transactional activity keeping MF Global in business, was slow to deliver urgent funding in the final, frantic days leading up to the bankruptcy filing.

(Reporting by Sarah N. Lynch and Aruna Viswanatha in Washington, D.C.; Additional reporting by Philip Shishkin in Washington, D.C., and Carrick Mollenkamp and Jonathan Stempel in New York; Writing by Jonathan Stempel; Editing by Tim Dobbyn)