HERE IS CORZINE”S TESTIMONY TO CONGRESS
Dooming MF Global Email May Have Just Done Corzine In
The mystery around the missing MF Global money may not be such a mystery after all.
Jon Corzine, former CEO of failed MF Global.
MF Global CEO, Jon Corzine, apparently gave direct instructions to move $200 million from a customer account so that his firm could cover an overdraft in a brokerage account held at JPMorgan Chase, Bloomberg News reports.
The order came from Corzine just days before MF GLobal went under, according to an email sent by Edith O’Brien, a treasurer for the firm which was obtained by Bloomberg. The email is part of a memo drafted by congressional investigators looking into the firm’s collapse.
Barry Zubrow, JPMorgan’s chief risk officer, called Corzine to seek assurances that the funds belonged to MF Global and not customers. JPMorgan drafted a letter to be signed by O’Brien to ensure that MF Global was complying with rules requiring customers’ collateral to be segregated. The letter was never returned to JPMorgan, the memo said.
The money transferred came from a segregated customer account, according to congressional investigators. Segregated accounts can include customer money and excess company funds.
Corzine testified that he never intended a misuse of customer funds at MF Global, and that he doesn’t know where client funds went.
The e-mails could be damning for MF Global, particularly its CEO Corzine. Two hundred million is merely a drop in the bucket compared to the total $1.6 billion of customer funds that have yet to be recovered, but if Corzine was truly calling the shots to move client money around to cover losses elsewhere then that spells big trouble.
The problem is it wasn’t that long ago when Corzine told Congress he had no idea where the missing money was located. In early December, the former Senator and Democratic Governor of New Jersey testified before the House Committee on Agriculture saying, “I simply do not know where the money is or why the accounts haven’t been reconciled.”
He also added that he was no expert on the rules and regulations, and operational difficulties, regarding the segregation of accounts and the specific transactions the occurred as his company was about to fail.
Well, the Volcker Rule will aim to change that. It aims to bans firms from trading with their own capital for fear of customer assets getting caught up in losses. The latest in the MF Global mess will likely breathe some new life into the rule which some are fighting to delay calling it to complex.