Jon Corzine’s “Negligent Conduct” Blamed for MF Global Collapse

0

A MF Global Holdings Ltd (PINK:MFGLQ) trustee said in the latest report Thursday that former CEO Jon Corzine is to blame for the brokerage firm’s dramatic collapse in 2011.

Louis J. Freeh, former FBI director and trustee of MF Global Holdings Ltd (PINK:MFGLQ), said  Jon Corzine implemented trading strategies with minimal oversight, exceeded the limits approved by the board on European trades and failed to improve inadequate systems. Corzine’s team failed to improve faulty controls even after being warned.

The report said that all these weaknesses prevented the board from knowing the reality that customer funds were being used to fulfill MF Global’s own needs. Feeh said that Corzine’s proprietary trading strategy made it almost impossible to monitor the liquidity drains.

Gates Capital Management Reduces Risk After Rare Down Year [Exclusive]

Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy, have produced a 12.6% annualised return over the past 26 years. The funds added 7.7% overall in the second half of 2022, outperforming the 3.4% return for Read More

The trustee acknowledged that the slow economic recovery also played a role in the company’s growing woes, but it was Corzine’s “negligent conduct” that eventually led to its failure.

The 124-page report further said that Jon Corzine and his team already knew several deficiencies like a lack of an integrated global treasury system, and that they didn’t implement corrective measures, reports the Wall Street Journal. While investigating, the trustee reviewed hundreds of thousands of documents, and interviewed former MF Global Holdings Ltd (PINK:MFGLQ) board members and employees.

The investigation revealed that MF Global was missing $1.6 billion of customers’ money.

After the collapse, MF Global was criticized by both parties in the Senate for distributing outrageous bonuses to the top management. MF Global, which didn’t receive any bailout money from the government, was the 8th largest bankruptcy in the history of the United States.

The issue turned political because Corzine, who was the ex-CEO of Goldman Sachs Group, Inc. (NYSE:GS), is a strong supporter of Barack Obama. Until the firm collapsed, there were speculations that he could even be appointed as the next Treasury Secretary.

In an earlier report published in June, 2012, the MF Global Holdings Ltd (PINK:MFGLQ) trustee had only expressed the possibility that Corzine’s negligence could have been the main cause of the collapse.

No posts to display