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Media Runs Defense For Corzine After MF Global Revelation
Email: Corzine directly ordered transfer of stolen customer funds
The media has predictably leapt to former MF Global head John Corzine’s defense following the revelation that $200 million dollars in customer funds was stolen, “per JC’s direct instructions,” by regurgitating the talking point that Corzine was unaware of the fact that the money was taken from clients.
A memo released by the House Financial Services subcommittee contradicts Corzine’s claim, made under oath before Congress, in which the former New Jersey governor claimed, “I did not instruct anyone to lend customer funds to anyone.”
$200 million dollars in customer funds, part of a $1.6 billion in client money that disappeared, was sent to MF Global’s account with JP Morgan by direct order of Corzine, the email reveals.
“The memo released Friday details an email by Edith O’Brien, an assistant treasurer at MF Global, saying the transfer last October 28 “per JC’s direct instructions” would cover an overdraft in the London account of JPMorgan Chase. “JC” stood for Corzine,” reports Politico.
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Corzine Corzined – Congressional Panel Finds Former MF Global CEO Ordered JPM Fund Transfer
MF’s Corzine Ordered Funds Moved to JP Morgan, Memo Says
Jon S. Corzine, MF Global Holding Ltd. (MFGLQ)’s chief executive officer, gave “direct instructions” to transfer $200 million from a customer fund account to meet an overdraft in a brokerage account with JPMorgan Chase & Co. (JPM), according to a memo written by congressional investigators.
Edith O’Brien, a treasurer for the firm, said in an e-mail quoted in the memo that the transfer was “Per JC’s direct instructions,” according to a copy of the memo obtained by Bloomberg News. The e-mail, dated Oct. 28, was sent three days before the company collapsed, the memo says. The memo does not indicate whether that phrase was the full text of the e-mail or an excerpt.
O’Brien’s internal e-mail was sent as the New York-based broker found intraday credit lines limited by JPMorgan, the firm’s clearing bank as well as one of its custodian banks for segregated customer funds, according to the memo, which was prepared for a March 28 House Financial Services subcommittee hearing on the firm’s collapse. O’Brien is scheduled to testify at the hearing after being subpoenaed this week.
“Over the course of that week, MF Global’s financial position deteriorated, but the firm represented to its regulators and self-regulatory organizations that its customers’ segregated funds were safe,” said the memo, written by Financial Services Committee staff and sent to lawmakers.
Steven Goldberg, a spokesman for Corzine, said in a statement that Corzine “never gave any instruction to misuse customer funds and never intended anyone at MF Global to misuse customer funds.”
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$1.2 Billion ‘Vaporized’ Under Obama Bundler Jon Corzine’s ‘Leadership’ at MF Global
Former New Jersey Governor Jon Corzine had little trouble finding $500,000 in his role as a top Obama campaign bundler, but locating the missing $1.2 billion in customer funds he oversaw as the head of MF Global funds is proving far more difficult–impossible even, reports the Wall Street Journal.
A person close to the investigation told The Journal that a “significant amount” of customers’ money appears to have “vaporized”:
Nearly three months after MF Global Holdings Ltd. collapsed, officials hunting for an estimated $1.2 billion in missing customer money increasingly believe that much of it might never be recovered, according to people familiar with the investigation.
As the sprawling probe that includes regulators, criminal and congressional investigators, and court-appointed trustees grinds on, the findings so far suggest that a “significant amount” of the money could have “vaporized” as a result of chaotic trading at MF Global during the week before the company’s Oct. 31 bankruptcy filing, said a person close to the investigation.
Many officials now believe certain employees at MF Global dipped into the “customer segregated account” that the New York company was supposed to keep separate from its own assets—and then used the money to meet demands for more collateral or to unfreeze assets at banks and other counterparties as they grew more concerned about their financial exposure to MF Global.
During a House hearing in December, Mr. Corzine said he “doesn’t know” where the $1.2 billion went or is.
Presenting The Three Unscripted Sentences That May Have Cost Jon Corzine His Freedom
Today, in advance of their sworn testimony, each witness to the Senate Agricultural Committee’s MF Global hearing was requested to disclose what their prepared remarks would be. Sure enough, CME executive chairman Terry Duffy did that, and his prepared testimony can be found here.
In and of itself there was nothing unexpected about said speech, the relevant section of which has been transcribed below. Where things got very ugly for Corzine, is when Duffy literally veered from the script, and added three unexpected sentences, catching everyone in the committee off guard (including those who had given up on the testimony which came just after Corzine’s) and which according to most news wires could have buried Corzine’s defense strategy, exposing him for a liar under oath, and potentially costing him his freedom. The video of the relevant 2 minutes is attached below.
First: here is what the Duffy prepared remarks should have been:
Our auditors returned on Sunday, October 30th because we learned from the CFTC that the draft segregation report for Friday, October 28th, which had been provided to the CFTC that day, showed a $900 million dollar shortfall in segregation caused by an “accounting error.” Our auditors, working… Continue reading
Corzine Defends Tenure, Puzzles Over Missing Funds
Jon S. Corzine defended his tenure as chief executive of MF Global Holdings Ltd. before a House committee, but couldn’t explain an estimated $1.2 billion in missing customers’ money.
Visibly tense in the politically charged hearing, Mr. Corzine, 64 years old, on Thursday told the House Agriculture Committee that he has been “devastated by the enormous impact on many peoples’ lives” caused by MF Global’s collapse.
“I simply do not know where the money is,” he said in response to questions from the panel, noting that “there were an extraordinary number of transactions during MF Global’s last few days” and that he didn’t know everything that was going on.
Pressed for an answer as to what could have happened, he said it was possible, though unlikely, that underlings might have misunderstood an order and mistakenly dipped into customer funds. Mr. Corzine said he still expects that the money eventually will be found and recovered.
Mr. Corzine resigned as MF Global chairman and chief executive days after the firm’s Oct. 31 bankruptcy filing. Speaking in a deep, raspy voice, the former New Jersey senator and governor and Goldman Sachs Group Inc. chairman appeared as befuddled by what had happened to his firm as the regulators who have been attempting to resolve the matter for more than a month. It was his first public appearance since the firm’s collapse.
Frequently stroking his trademark beard and fumbling with his prepared testimony, Mr. Corzine argued that MF Global was felled not by its $6.3 billion bet on European debt, but rather by a sudden lack of confidence in its balance sheet by the broader market in October.
MF Global Swindle: House Committee Not Likely to Play Hardball with Corzine
Editor’s note: Following opening statement at Corzine’s House hearing, the video and audio feed on C-Span went mysteriously dead.
It looks like John Corzine’s appearance before a House committee will be little more than a formality. Corzine, the former Goldman Sach’s CEO, New Jersey governor, and boss of MF Global days before it went toes up and made off with $1.2 billion in customer money, is expected to say little or nothing and take the Fifth.
Corzine has retained Andrew Levander, a hired high-powered white-collar criminal defense lawyer, the New York Post reported yesterday. Sources told the newspaper Levander advised Corzine not to tell his side of the story during the House grilling today.
The former MF Global boss has apologized to customers swindled out of money.
The MF Global implosion is the largest since the 2008 bankruptcy of Lehman Brothers, in part triggered by $6 billion in gambling on European sovereign debt.
“I simply do not know where the money is, or why the accounts have not been reconciled to date,” he declared in a written statement. He said he was not sure if there were “operational errors at MF Global or elsewhere, or whether banks and counterparties… Continue reading
