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Commodity Commission Sues Ex-MF Global CEO

June 28, 2013
MF Global Ripples Still Moving  2

The Commodity Futures Trading Commission sued former MF Global Holdings Ltd. Chief Executive Officer Jon Corzine for failing to properly oversee the company as it spiraled toward bankruptcy in 2011.

The regulator also sued MF Global’s former assistant treasurer Edith O’Brien and said it reached a settlement with a unit of the company, MF Global Inc., to pay all funds due to customers and impose a $100 million penalty. The settlement is subject to court approval.

MF Global’s collapse led to billions of dollars in missing client funds at the broker dealer and the eighth-biggest bankruptcy in U.S. history.

Corzine, who once served as a New Jersey senator and governor and was a co-chairman of Goldman Sachs Group Inc., presided over MF Global before it filed for bankruptcy on Oct. 31, 2011. Wrong-way $6.3 billion trades on bonds of some of Europe’s most-indebted nations helped destroy the company and its brokerage unit, MF Global Inc.

Corzine, 66, has been faulted by members of Congress, former customers and the trustees overseeing the wind-down of MF Global. While the Federal Bureau of Investigation started a probe of the events leading to the bankruptcy, no charges were filed in the case.

Steve Goldberg, a spokesman for Corzine, said before the complaint was filed that Corzine wasn’t informed customer funds were at risk or were being used improperly. There is no evidence he failed to work with management to try and turn around a failing company, he said.

Goldberg said Corzine was subject to "political pressure to hold someone liable" for the failure of the firm.

The CFTC itself has been blamed at times for contributing to MF Global’s downfall. The regulator, chaired by Corzine’s ex- Goldman Sachs colleague Gary Gensler at the time of MF Global’s collapse, failed to coordinate with the Securities and Exchange Commission, according to a 101-page report last November by U.S. House Republicans.


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