MF Global Holdings Ltd (OTCMKTS:MFGLQ) will have to pay $1.2 billion in restitution and $100 million in civil fines in addition to admitting guilt as part of a settlement with the Commodity Futures Trading Commission (CFTC) regarding its conduct when the company went bankrupt in 2011, FINalternatives reports. The deal doesn’t cover individuals working at MF Global, and the CFTC is still suing CEO Jon Corzine, alleging that he did not act in good faith. Corzine denies any wrongdoing.
MF Global went bankrupt in 2011
MF Global Holdings Ltd (OTCMKTS:MFGLQ) went bankrupt in 2011 when it went deep on European sovereign debt and lost. The problem is that before closing shop, it wired $1.6 billion in customer funds to cover the losses. Most people blame Corzine for the money transfer, and until recently no one expected the clients to be made whole. Getting so much money back is impressive, but it doesn’t absolve anyone of taking client money in the first place.
“Division staff have worked tirelessly to ensure that 100% restitution be awarded to satisfy customer losses,” said acting director of CFTC enforcement Gretchen Lowe, the BBC reports. “The CFTC will continue to ensure that those who violate US commodity laws and regulations designed to protect customer funds will be vigorously prosecuted.”
Corzine has kept a low profile
Corzine, who is also the former New Jersey governor, took the helm of MF Global Holdings Ltd (OTCMKTS:MFGLQ) in 2010 with the plan of turning it into a major Wall Street player, and his oversized bet was probably an attempt to jumpstart the process. Corzine has kept a low profile since MF Global Holdings Ltd (OTCMKTS:MFGLQ) went under, and it’s hard to believe that anyone on Wall Street would want the bad publicity that he now brings along, but he has said through a spokesperson that he’s happy his former clients are getting their money back. “Mr. Corzine is very pleased that all customers will receive a full recovery,” the spokesperson said. “This is a great outcome, which has been anticipated for many months.”
CFTC must also be happy with the outcome. The AlphaMetrix debacle has hurt its credibility, and the regulatory body needs to prove that it has the ability to effectively regulate the futures market.