The Wall Street Journal reported yesterday that disgraced former MF Global CEO Jon Corzine, also former chairman of Goldman Sachs and ex-New Jersey Democrat governor has discussed plans to start his own hedge fund. It would start with Corzine’s personal cash, as well as a handful of outside investors, the paper reported and could only be launched after legal proceedings are settled related to the failings of MF Global.
A brief reminder…Jon Corzine, who was CEO and Chairman of MF Global, a multinational futures broker and bond dealer, appointed in March 2010 and who resigned as CEO on November 4, 2011 which is shortly after one of the 10 largest U.S bankruptcies in history when on October 31, 2011, trading was halted on shares of MF Global prior to the market opening, and soon thereafter MF Global announced that it had declared Chapter 11. Shortly afterwards, federal regulators began an investigation into hundreds of millions of dollars in missing customer funds.
$1.6 billion dollars was reported missing from MF Global client accounts after the bankruptcy, in a breach of segregated client funds. Mr. Corzine who was acting CEO at the time of the crisis testified before congress stating, “I simply do not know where the money is, or why the accounts have not been reconciled to date”, and that given the number of money transfers in the final days of trading at MF Global, he didn’t know specifics of the movement of the funds. He also denied authorizing any misuse of customer funds.
However, reports dispute this claim…in March 2012, Bloomberg reported that a memo produced by congressional investigators quotes an internal company e-mail as saying Corzine gave “direct instructions” to use customer money to cover the company’s own shortfalls prior to bankruptcy.
In February 2013, a court approved a settlement deal among MF Global’s bankruptcy trustees that will reimburse its customers for 93 percent of the value of their accounts, from which about $1.6 billion had disappeared during the firm’s bankruptcy.
Later in June 2013, the CFTC filed civil charges against Corzine for using funds from MF’s customer accounts for corporate purposes. “Corzine was charged with one count of failure to segregate and misuse of customer funds and one count of failure to supervise diligently.”
On a CNBC interview yesterday, repo market expert and author Scott Skyrm said: “He’s about as radioactive as Chernobyl’s soil right now,” author of “The Money Noose: Jon Corzine and the Collapse of MF Global” and managing director at Wedbush Securities.
“The CTFC charges against him are extraordinarily serious. They’re not resolved. It’s extremely problematic and it is shocking that he would even have the gall to even go out there and try to manage more money.”
Skyrm went on to state on the CNBC discussion: “If you were responsible for pension money, let’s say, would you trust your money with Jon Corzine given what the CTFC has alleged?” he said. “Nobody who is a fiduciary to other client money can turn money over to Jon Corzine with a healthy conscious.”
Check out the CNBC discussion below regarding Corzine:
For a detailed description on the European debt trades that killed MF Global, click here.