In a shocking new revelation concerning last fall’s collapse of New York brokerage firm MF Global, it has been learned that CEO Jon S. Corzine personally ordered the transfer of $200 million out of a customer fund to cover an overdraft at one of the firm’s own accounts with JPMorgan Chase.
Bloomberg News reported on Friday that an internal email sent by the firm’s treasurer and dated three days before the company collapsed at the end of October described the transfer as being “Per JC’s direct instructions.”
Corzine, a former governor of new Jersey, had testifed before a congressional committee in December that “I did not instruct anyone to lend customer funds to anyone.”
“I simply do not know where the money is, or why the accounts have not been reconciled to date,” Corzine told the investigators at that time.
Bankruptcy trustees overseeing the liquidation of the company, which failed as a result of its over-exposure to the European debt crisis, have estimated that the firm’s assets fall $1.6 billion short of what would be needed to meet customer claims.
The newly-revealed email is included in a memo drafted for a House Financial Services Subcommittee hearing to be held next Wednesday. The memo explains that despite MF Global’s financial problems, it was still telling regulators in late October that customer funds were safely segregated.
Prior to the transfer, JPMorgan drafted a letter to be signed by MFGlobal’s treasurer stating that the transfer was in compliance with rules requiring the segregation of customer funds. This letter was never returned.
Video from Bloomberg News, March 23, 2012.
Photo by flickr user Tony the Misfit [CC-BY-2.0 (www.creativecommons.org/licenses/by/2.0)], via Wikimedia Commons
Muriel Kane is an associate editor at Raw Story. She joined Raw Story as a researcher in 2005, with a particular focus on the Jack Abramoff affair and other Bush administration scandals. She worked extensively with former investigative news managing editor Larisa Alexandrovna, with whom she has co-written numerous articles in addition to her own work. Prior to her association with Raw Story, she spent many years as an independent researcher and writer with a particular focus on history, literature, and contemporary social and political attitudes. Follow her on Twitter at @Muriel_Kane
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