MF Global Holdings Ltd. collapsed last year because of mistakes made by former chairman and chief executive officer Jon S. Corzine, according to a summary of findings from a probe led by U.S. House Republicans.
Corzine expanded into new areas of business without ensuring its core commodities trading business, according to the findings released today by Representative Randy Neugebauer, the Texas Republican and chairman of the U.S. House Financial Services subcommittee that pursued a yearlong investigation into the collapse. Corzine, a former U.S. senator, governor of New Jersey and Goldman Sachs Group Inc. co-chairman, has testified to Congress that he doesn't know what happened to the money.
“Choices made by Jon Corzine during his tenure as chairman and CEO sealed MF Global's fate,” Neugebauer said in an e-mail statement. “By expanding MF Global into new business lines without first returning its core commodities business to profitability, Corzine ensured that the company would face enormous resource demands and exposed it to new risks that it was ill-equipped to handle,” the report states.
The summary reflects conclusions reached by Republicans, who hold a majority on the panel and were in contact with Democrats during the investigation, according to Jeff Emerson, spokesman for the Financial Services Committee. The investigation included three congressional hearings, more than 50 interviews and a review of documents from MF Global, former brokerage employees and regulators, according to the summary.
Returning Money
MF Global, which filed the eighth-largest U.S. bankruptcy on Oct. 31, 2011, is returning money to customers who faced a $1.6 billion shortfall as part of the firm's liquidation.
The CFTC, Securities and Exchange Commission and Justice Department have been investigating the collapse of MF Global. The congressional investigation had trouble determining who was responsible for the gap in client funds, Neugebauer said in an interview last month.
“Those people may be talking to the regulators or law enforcement officials, but they aren't talking to us and so it makes it difficult for us to make that call,” Neugebauer said in an Oct. 31 interview in Chicago.
Louis Freeh, a trustee for parent company MF Global Holdings Ltd. has been unwinding the parent company under Chapter 11 of the U.S. Bankruptcy Code in an effort to repay creditors. James Giddens, a separate trustee for the failed brokerage, MF Global Inc., is liquidating assets to repay customers under the Securities Investor Protection Act. Each trustee has conducted his own probe into how the company failed and they have been at odds over whether certain sums belong to creditors or customers.
Steven Goldberg, a New York-based spokesman for Corzine, declined immediate comment.
The brokerage case is Securities Investor Protection Corp. v. MF Global Inc., 11-02790, U.S. District Court, Southern District of New York (Manhattan). The parent's bankruptcy case is MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Bloomberg News
Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.
Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
- Informative weekly newsletter featuring news, analysis, real-world case studies, and other critical content
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
