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CFTC takes action against MF Global, Corzine and O’Brien, finally

By Ginger Szala

August 1, 2013 • Reprints

As most traders know, brokers have to tape phone calls. So perhaps the most interesting aspect of the Commodity Futures Trading Commission’s (CFTC) enforcement action against Jon Corzine, Edith O’Brien and MF Global are the internal phone calls and e-mails between staff when the firm was going down. On June 27, Corzine was charged by the CFTC that MF Global unlawfully used nearly one billion dollars of customer segregated funds to support its own proprietary operations and the operations of its affiliates…. Corzine bears responsibility for MF Global’s unlawful acts. He held and exercised direct or indirect control over MF Global and Holdings and either did not act in good faith or knowingly induced these violations, the CFTC stated in its complaint. Likewise, Edith O’Brien, assistant treasurer of MF Global and head of liquidity management, approved and/or caused numerous illegal transfers of customer segregated funds to the Firm’s proprietary accounts, and otherwise aided and abetted MF Global’s customer segregated fund liquidity.

The CFTC complaint is against MF Global Inc., MF Global Holdings, Jon Corzine and Edith O’Brien. MF Global receivers have signed off on the settlement and now it’s up to the U.S. bankruptcy court to approve. 

After the complaint was announced, word spread through a New York Post story quoting an anonymous source that the Department of Justice(DOJ) had dropped any criminal investigations against Corzine, although the DOJ’s only on-the-record comment was “no comment.” One source told us that historically government agencies will wait to press civil charges until after any DOJ criminal actions; in this case that didn’t happen, inferring but not confirming criminal charges won’t be filed. But this isn’t always true, especially when customer funds are on hold, noted one attorney. On another front, Rep. Michael Grimm (R-NY) is calling on the DOJ for criminal charges against Corzine, citing that based on the taped calls by Corzine, he perjured himself during congressional hearings. Update: on Aug. 1, a letter from several Republican lawmakers was sent to the DOJ requesting an investigation of Corzine, comments he was taped as saying and his testimony in front of Congress. 

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About the Author

In her many years covering the futures industry Ginger has interviewed some of today's best global hedge fund and commodity trading advisors. Ginger received a master's degree in journalism at Northwestern University's Medill School of Journalism and a bachelor’s in communication arts from the University of Wisconsin – Madison

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Congress 1894Commodity Futures Trading Commission 1289U.S. Securities and Exchange Commission 958cftc 937CME Group 851investment bank 415MF Global 347Department of the Treasury 274Regulations 267UN Court 240Department of Justice 218Bankruptcy 149MF Global Inc. 137Jon Corzine 130Corzine 59Senate Agriculture Committee 33MF Global Holdings 30Bank of New York Mellon 29Henri Steenkamp 22New York Post 21Brien 21Michael Grimm 8liquidity management 6O'Brien 4Andrew Levander 4MF Global Finance USA Inc. 3recorded telephone call 3Vinay Mahajan 3recorded telephone line 2margin payment 2JPMorgan Trust 1

Free Newsletter Modern Trader Follow

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    • Futures Op-Ed
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      • FUTURES MAG's 500th ISSUE
      • We asked traders
  • Traders
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    • Interactive Charts
    • Trading Calendar
  • FINalternatives
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