Based on the evidence, the report ultimately lays the fault for the firm’s demise on Corzine for his ambitious plans for the company, but failure to put adequate risk controls into place. “By expanding MF Global into new business lines without first returning its core commodities business to profitability, Corzine ensured that the company would face enormous resource demands and exposed it to new risks that it was ill-equipped to handle,” the report says.
This expansion into new business lines, the authoritarian atmosphere that Corzine created and a failure to ensure proper bookkeeping led to the misuse of customer funds in the firm’s final days. “As the company struggled to find additional liquidity, company employees identified excess company funds held in customer accounts. However, because they did not have an accurate accounting of the amount of customer funds the company held, they withdrew customer funds as well as company funds.”
MF Global currently is the subject of multiple civil and criminal investigations in jurisdictions around the world. Prosecutors and MF Global’s regulators will determine whether the company or its employees violated laws or regulations.
Responding to the briefing of the report released yesterday, Steven Goldberg, partner at RLM Finsbury and spokesman for Corzine, said, "[T]he Subcommittee makes a number of assertions as to Mr. Corzine’s 'failures' in managing MF Global. When Mr. Corzine joined MF Global he was tasked with quickly turning around a failing business, shoring up internal processes and controls, and, most importantly, immediately returning MF Global to profitability. He set a new strategy for the firm after extensive discussions with the Board, the senior management team and well respected outside consultants. At all times Mr. Corzine acted in good faith and did what he believed was necessary to turn around MF Global."
In the end, the report finds that Corzine ultimately is accountable for what happened at MF Global. “The responsibility for failing to maintain the systems and controls necessary to protect customer funds rests with Corzine. This failure represented a dereliction of his duty as MF Global’s Chairman and CEO.”