Corzine in $5 million settlement with US CFTC over MF Global collapse

January 6, 2017 09:16 AM

Jon Corzine, former New Jersey governor and Goldman Sachs co-chairman, will pay a $5 million civil fine to settle a U.S. regulator's lawsuit over the 2011 collapse of his commodity brokerage, MF Global Holdings Ltd.

Thursday's accord with the U.S. Commodity Futures Trading Commission resolves the last piece of litigation against Corzine over MF Global's rapid descent into bankruptcy on Oct. 31, 2011, as an estimated $1.6 billion of customer money went missing.

The agreement, which has been approved by a federal judge, bars Corzine from ever working for a futures commission merchant or registering with the CFTC. He also cannot ask insurers to cover the fine.

"I am pleased to have reached this settlement," Corzine, who turned 70 on Jan. 1, said in a statement. "As the CEO of MF Global in 2011, I have accepted responsibility for its failure, and I deeply regret the impact it had on customers, employees, shareholders and others."

Andrew Levander, Corzine's lawyer, noted that none of the criminal and civil probes into MF Global's demise led to charges that Corzine engaged in intentional misconduct or fraud.

In a related settlement, Edith O'Brien, MF Global's former assistant treasurer, agreed to pay a $500,000 civil fine and accept an 18-month industry ban to resolve claims that she "aided and abetted" the misuse of customer funds.

O'Brien's lawyer, Christopher Barber, declined to comment.

The CFTC said MF Global improperly used nearly $1 billion of customer funds to shore up liquidity during the last week of October 2011, rather than keep the funds separate.

This commingling occurred as margin calls, credit rating downgrades and Corzine's big wager on European sovereign debt left customers and investors increasingly worried about the New York-based company's survival.

The CFTC said Corzine failed to properly supervise employees handling customer funds, while O'Brien authorized the illegal transfer of customer funds to MF Global accounts as the specter of bankruptcy loomed.

Customers were fully repaid in 2014.

Corzine and other former MF Global executives last year reached a $132 million settlement with a trustee liquidating the company on behalf of creditors.

A year earlier, executives reached a $64.5 million settlement of separate investor litigation.

Portions of the earlier payouts were covered by insurance.

Corzine, a Democrat, is also a former U.S. senator, and now manages his own money.

He said he plans to focus on "issues that have always been important in my life: my family, community and philanthropic causes, and markets."

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