Jon Corzine’s MF Global Is Now Under Investigation by the Feds
The Feds are now looking into Corzine’s company’s disaster…
Former U.S. Senator, New Jersey governor, and Goldman Sachs boss Jon Corzine’s week is not getting any better after the Monday collapse of MF Global, the commodities and derivatives trading firm he’s been running since losing to Chris Christie. It now appears that hundreds of millions of dollars of customers’ money are missing, prompting the FBI and the SEC to look into whether or not something illegal was going on at Corzine’s “mini-Goldman.” Of the ramped up investigation, one credit analyst said, “I think it will add to the complexity of the situation and will add to more skeletons.” And Corzine himself is taking most of the blame.
The company’s bankruptcy stemmed mostly from big investments in European bonds, which Corzine said last week were not exceptionally risky, but were likely complicated by a demand for collateral from antsy lenders. As Felix Salmon of Reuters tells it in a detailed explanation, “MF Global, leveraged to the eyeballs, didn’t have that kind of extra money lying around.”
By all accounts, Corzine was making the decisions:
His insistence on taking more risks, including buying the debt of European countries like Italy and Spain, along with a contract that would have provided him with an additional $12.1 million if he left the firm, paint a picture of excess.
Meanwhile the night before the bad news came out about his company he went to a steak dinner and “gave a spectacular speech’. He left early to ‘prepare for an earnings call the next day’.
The night before MF Global Holdings Ltd. (MF) posted its biggest quarterly loss, triggering a 48 percent stock plunge, Chairman and Chief Executive Officer Jon Corzine appeared at a steak dinner at New York’s Helmsley Park Lane Hotel for a speech to a group of bankers and traders.
‘There was no sense at all that there was impending doom,’ Kenneth Polcari, a managing director of ICAP Corporates, said of Corzine’s Oct. 24 address to the National Organization of Investment Professionals. ‘He gave a spectacular speech’ about his decades at Goldman Sachs Group Inc. (GS), life as a U.S. senator and New Jersey governor and his return to the private sector. ‘He’s had a full life, up until now.’
Corzine, 64, excused himself before the main course was served, saying he had to prepare for an earnings call the next day, said David Shields, vice chairman of New York-based brokerage Wellington Shields & Co. and a former chairman of the organization. The group seeks to foster ‘a favorable regulatory environment,’ according to its website.
Timothy Mahoney, CEO of New York-based Bids Trading LP, said Corzine’s speech was ‘delightful.’
The next day, MF Global reported a $191.6 million net loss tied to its $6.3 billion wager on European sovereign debt. On Oct. 27, after the company’s bonds dropped to 63.75 cents on the dollar, Moody’s Investors Service and Fitch Ratings cut the firm to below investment grade, or junk. Unable to find a buyer, the company filed for bankruptcy on Oct. 31, the first major U.S. casualty of the European debt crisis.
Jon Corzine, chairman and chief exexutive officer of MF Global Holdings Ltd., at a New York Philharmonic dinner in September. On Oct. 24, Corzine excused himself before the main course was served at a steak dinner at New York’s Helmsley Park Lane Hotel, saying he had to prepare for an earnings call the next day.