Congress Panel Blames Corzine for MF Global Fall
WASHINGTON | Wed Nov 14, 2012 2:34pm EST(Reuters) – Poor management decisions by MF Global’s former CEO Jon Corzine triggered the brokerage firm’s collapse, while lax protections for customer funds contributed to the loss of an estimated $1.6 billion of customer money, congressional investigators have determined.
Evidence unearthed by the House Financial Services Subcommittee on Oversight puts the blame squarely on Corzine, the panel’s chairman Rep. Randy Neugebauer, said in a preview of the report that will be released on Thursday.
“The responsibility for failing to maintain the systems and controls necessary to protect customer funds rests with Corzine,” the report says. “This failure represents a dereliction of his duty as MF Global’s chairman and CEO.”
Corzine, a former co-chairman of Goldman Sachs who also served as a U.S. senator and as governor of New Jersey, has denied any wrongdoing.
MF Global filed for bankruptcy more than a year ago, as investors scrambled to pull out funds after revelations the firm bet heavily on European sovereign debt and after credit downgrades.
Regulators, prosecutors and lawmakers have been looking into the estimated $1.6 billion in customer funds revealed to be missing after the firm’s collapse.
The House subcommittee said it has held three hearings, interviewed more than 50 witnesses and reviewed thousands of documents from MF Global, its regulators and other sources.
The report will show that risks were exacerbated by an atmosphere at the firm in which no one could question Corzine’s decisions, the subcommittee said.
Corzine also kept his own trading activities out of the firm’s risk management review process, the subcommittee said. The group said it also found that regulatory agencies had not shared crucial information with each other, and other problems.
A trustee liquidating the company’s broker-dealer unit released a critical report in June that said that in his attempt to build the firm into a global investment powerhouse, Corzine failed to address growing liquidity needs.
A spokesman for Corzine did not immediately respond to a request for comment.
(Reporting By Karey Wutkowski, Sarah N. Lynch and Emily Stephenson; editing by John Wallace and David Gregorio)