Corzine tie didn’t compel Gensler MF Global recusal, review says

Internal CFTC review finds no need for Gensler recusal on MF Global

Marathon Men

The memo even explored why Gensler ran the New York Marathon with Corzine’s number more than 20 years ago. According to the report, Gensler learned that Corzine had registered to run the 1991 race. Gensler asked Corzine’s secretary if Corzine was actually going to run. Several weeks later, the secretary informed Gensler that Corzine had decided against running and wouldn’t need the number, the memo said. The secretary gave the number to Gensler.

The electronic archives of the New York Road Runners don’t list a marathon result for Gensler or Corzine in 1991. In 1992, Corzine is listed as running the marathon in four hours, 21 minutes. In 1996, Gensler is listed as running the marathon in three hours, 34 minutes.

The CFTC analysis also reviewed Gensler’s relationship with Bradley I. Abelow, president and chief operating officer at MF Global and who also worked with Gensler at Goldman, and Laurie R. Ferber, general counsel at MF Global and also a former Goldman employee. Gensler didn’t have frequent conversations with either, the analysis found.

The review then looked into Gensler’s relationship with J. Christopher Flowers, an investor in MF Global who recruited Corzine to lead the brokerage. Gensler and Flowers worked at Goldman’s mergers and acquisitions department for 12 years. They frequently discussed mergers, but dealt with different industries and didn’t work on the same deals, according to Gensler’s interview with the lawyers.

Financial Distress

Gensler and Flowers didn’t have a social relationship, the memo said. Flowers called Gensler twice at the CFTC, including on the day of MF Global’s bankruptcy. Several other CFTC employees were present when Gensler returned the call.

As MF Global grappled publicly with financial distress, Gensler was also in communication with Jacob Goldfield, another former Goldman Sachs partner who co-managed Corzine’s blind trust while he was an elected official, the memo said.

Goldfield and Gensler met in 1991 or 1992 at Goldman Sachs’ fixed-income department. Gensler had co-supervisory responsibility for trading of Yen currency swaps while he was based in Tokyo; Goldfield, then located in New York, oversaw the firm’s worldwide swaps book, according to the memo.

‘Novel Insights’

On Oct. 30, Goldfield sent Gensler an e-mail to inform him that he was present at MF Global “in case there are questions.” Goldfield told Gensler that he had “no financial interest in the company and [was] not looking at it for investment,” according to the memo. Gensler asked Goldfield if there were observations to pass along.

“Not as of now, I want only to send along novel insights that are useful,” Goldfield replied.

“Novel and useful. Now those are limiting conditions, though I would say that most everything you have shared over our long knowing each other has been useful,” Gensler said.

Goldfield responded: “Also want to make sure that I am right before I comment.”

The next day, Oct. 31, Gensler was awakened by a 2:30 a.m. call from regulators and executives at MF Global, informing him that hundreds of millions of dollars of customer funds were missing. Within a week, he’d decided to recuse from the matter.

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