Business

MF Global's Jon Corzine charged by CFTC

  • 27 June 2013
  • From the section Business
Jon Corzine
Mr Corzine is a former governor of New Jersey

US regulators have charged the former chief executive of brokerage firm MF Global with failing to properly manage the company, which allegedly misused customer funds before its collapse.

The Commodity Futures Trading Commission (CFTC) said Jon Corzine "did not act in good faith" and did not diligently supervise.

About $1.6bn (£1bn) of client money went missing before the firm filed for bankruptcy protection in October 2011.

Mr Corzine has denied the allegations.

The CFTC also settled charges with MF Global itself, with the firm agreeing to pay a $100m penalty and all the funds it still owed to commodity customers.

The regulator also charged MF Global's former assistant treasurer, Edith O'Brien.

Transformation plan

MF Global collapsed after making a $6.3bn bet on European sovereign debt, and customers were left reeling when it emerged that more than $1bn of their money could not be found.

Most of that money has since been returned but Mr Corzine, a former governor of New Jersey and chief executive of Goldman Sachs, has said he did not know where the money went.

The CFTC said that Mr Corzine joined the company in March 2010 with a plan to transform the firm from a futures broker into a major investment bank.

But it said his strategy called for increasingly risky and larger investments of the firm's money, and "he knew that the firm was relying more and more on proprietary funds that it held alongside customer funds".

It said he did not ensure the company did not use customers' money to support its own proprietary operations.

"Turning a profit is not the only job of the person at the top of a CFTC-regulated firm," said David Meister, the CFTC's enforcement director.

"Particularly in times of crisis, the person in control, like the CEO here, must do what's necessary to prevent unlawful uses of customer money, so that customers' money is still there if and when the music stops."

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