For those holding out hope that the most recent Congressional hearings on the MF Global bankruptcy would clear up some confusion, Wednesday’s hearing before the House Financial Services Oversight and Investigations subcommittee entitled “The Collapse of MF Global: Part 3” was a huge disappointment.
Many people were eager to hear what MF Global Inc. Assistant Treasurer Edith O’Brien might say. However, as expected, O’Brien invoked her Fifth Amendment rights against self-incrimination and said little.
O’Brien was named by former MF Global Chairman and CEO Jon Corzine in hearings held this past December as someone who provided him assurance that money transfers to JP Morgan during the week prior to the bankruptcy filing were in compliance with the law.
This was of great interest as an e-mail from O’Brien was leaked, apparently from the subcommittee staff memo last week, that noted that the transfer was “Per JC’s [Jon Corzine’s] direct instructions.”
Appearing on the first panel in addition to O’Brien, who needed to be subpoenaed to appear, was MF Global Holdings General Counsel Laurie Ferber, MF Global Holdings CFO Henri Steenkamp and MF Global Inc. CFO North America Christine Serwinski.
Questions regarding the legality of those transfers were also of great concern to JP Morgan. The bank had gone so far as to request Jon Corzine provide written assurance that money transferred to cover an overdraft in one of its U.K. affiliates was not taken from customer segregated funds. Corzine turned this over to Ferber who asked JP Morgan to narrow the focus of the “compliance certificate.”