Corzine’s Corruption

Fmr head of MF Global tried to build company too quickly


A trustee of MF Global, James Giddens, released a report Monday that sheds new light on the company’s bankruptcy last October. The report shows how former MF Global CEO Jon Corzine tried to build the company without addressing its funding. Reuters reports:

In a blistering 275-page report, James Giddens, the trustee liquidating the company’s broker-dealer unit, said he might bring civil claims against former Chief Executive Corzine and other top MF Global executives for negligence and breach of duties to customers. …

He said liquidity at the company had long been a concern but became an even greater issue when Corzine came on board in March 2010. Corzine’s vision of MF Global as a global investment bank required the company to maintain higher liquidity levels, Giddens wrote. But Corzine and his team vastly underestimated just how big an increase it would need, Giddens said. …

To make up for the drain on liquidity, MF Global used customer money that was supposed to be segregated from the company’s own funds.

Corzine is the former Democratic governor of New Jersey and has raised more than $500,000 for Barack Obama.

Edith O’Brien, MF Global’s former assistant treasurer, told Congress that Corzine personally ordered the transfer of $200 million from customer accounts. Giddens’s report “described how by close of business on Monday, October 24, O’Brien approved $250 million of intraday transfers from customer accounts, even though the excess cushion in the customer account was less than $55 million.” Comingling such accounts is illegal.

Last month, Rep. Michael Grimm (R., N.Y.) led a group of congressmen in calling for an independent counsel to investigate Corzine. Since the former MF Global CEO “has bundled more than $500,000 for the president’s reelection campaign and lobbied administration officials on financial regulation,” the Obama administration cannot be trusted to investigate him fairly.

Corzine resigned days after MF Global’s collapse—but not before raking in $8.4 million in cash and stock options while the company was crumbling.