They crossed paths at Goldman Sachs Group Inc., the U.S. Senate, New Jersey campaign events and Princeton University. One man once borrowed the other’s number in the New York Marathon.
Still, Jon S. Corzine, the former chairman and chief executive officer of failed brokerage MF Global Holdings Ltd., and Gary Gensler, chairman of the Commodity Futures Trading Commission, didn’t have a close relationship, an internal analysis by CFTC lawyers found. They didn’t attend each other’s weddings, Corzine didn’t go to the bat mitzvahs of Gensler’s daughters and they haven’t socialized together in 14 years.
The agency’s review of Gensler’s links to Corzine and other MF Global executives culminated in a 15-page “confidential memorandum” dated Dec. 13. The lawyers, who interviewed only Gensler, concluded that the chairman’s Nov. 8 decision to recuse himself from the agency’s probe of MF Global wasn’t necessary.
“From a legal and ethical perspective, Chairman Gensler’s participation in commission matters involving MFGI would not be improper,” Dan M. Berkovitz, general counsel and ethics officer, and John P. Dolan, counsel and alternate ethics official, concluded in the memo.
The review, a copy of which was obtained through a public records request, was conducted while Gensler and the CFTC were under criticism from lawmakers for their oversight of MF Global, which sought bankruptcy protection Oct. 31. The failure, along with the recent collapse of Peregrine Financial Group Inc., undermined confidence in the futures industry and has spurred calls for new regulations.
Some in Congress have complained that Gensler’s recusal made it harder for them to monitor the agency’s actions.
“From our standpoint, we want a person to come before us and answer the hard questions,” Senator Mike Johanns, a Nebraska Republican, told Gensler at a Senate Banking Committee hearing Dec. 6. “That’s what your job is about. And it just feels to me like you’re not discharging the responsibilities of that job.”
The CFTC, alongside the Securities and Exchange Commission and Justice Department, has spent nine months investigating the collapse of MF Global and a resulting $1.6 billion gap in customer funds. Jill E. Sommers, a Republican commissioner, was named the senior member to oversee the investigation, and frequently testifies to Congress in Gensler’s place. The government hasn’t filed claims or charges.
Gensler, who worked for 18 years at Goldman Sachs and rose to become co-head of finance before leaving in 1997, was already thinking about the appearance of a conflict of interest when he joined the CFTC. In 2009, Gensler “determined not to participate in any CFTC matters involving GS,” referring to the Wall Street bank, according to the agency review.