Corzine decisions led to MF Global's collapse

According to a report released today by the House Financial Service’s Subcommittee on Oversight and Investigations, the ultimate onus for MF Global’s bankruptcy and missing customer funds rests squarely on Jon Corzine, the firm’s former CEO. “During his nineteen-month tenure as Chairman and CEO of MF Global, Jon Corzine made several fateful decisions, the cumulative effects of which caused MF Global’s bankruptcy and jeopardized customer funds,” the report says.

The Committee conducted more than 50 interviews and held three hearings at which it considered the testimony of 19 witnesses, including MF Global’s former senior managers and its principal regulators, and examined documents from a number of sources in its investigation. Released just over a year after MF Global declared bankruptcy, the Committee explains it has three reasons from conducting the investigation: “First, MF Global’s customers deserve to know how and why their funds went missing; second, market participants deserve to know whether regulatory lapses have been identified and corrected; and third, taxpayers deserve to know that regulators have been held accountable so that similar losses may be prevented from occurring in the future,” the report says.

The 100-page report details the history of the firm to show how Corzine’s decisions over 19 months led to the downfall of a firm that could trace its lineage back 230 years. Although the report places the responsibility squarely on Corzine, it first lists the details of the firm’s recent history including an unauthorized wheat trader in 2008 that lost the company $141.5 million and shattered confidence among some customers regarding the firm’s risk controls.

Corzine succeeded Bernie Dan as Chairman and CEO in March 2010. According to the report, “Securing an executive with Corzine’s reputation and experience was viewed as a potential coup for MF Global. After a 23-year career at Goldman Sachs in which he rose from a bond trading desk to become the company’s Chairman, Corzine served five years as a U.S. Senator and then four years as New Jersey’s Governor.”

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