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Corzine's Investment Firm MF Global Can't Find Missing $700 Million, Admits To Illegally "Diverting" Client Funds
By
Jen Chung
Published Nov 1, 2011
Modified Nov 2, 2011
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By
Jen Chung
Published Nov 1, 2011
Modified Nov 2, 2011
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When Jon Corzine lost his re-election bid to remain NJ's governor to Chris Christie, the former Goldman Sachs chairman decided to head an upstart brokerage, MF Global. After a shaky week last week, the company filed for bankruptcy yesterday as MF Global couldn't find $700 million. Dealbook explains, "The discovery that money could not be located might simply reflect sloppy internal controls at MF Global. At first, as much as $950 million was believed to be missing, but as the firm sorted through its bankruptcy, that figure fell to less than $700 million by late Monday, the people briefed on the matter said. Additional funds are expected to trickle in over the coming days." And now MF Global admits it mixed client and company funds (a big no-no) and diverted client funds as well.
According to the CME Group, the world's largest futures exchange, MF Global "isn’t in compliance with the rules of the exchange and the Commodity Futures Trading Commission." CME Group head Craig Donohue said,
"While we are unable to determine the precise scope of the firm’s violation at this time, we are investigating the circumstances of the firm’s failure."
Now the Wall Street Journal reports, "Regulators still don't know where the customer funds went, who directed the move or how widespread the practice was, the official said. Regulators are still working to determine whether MF Global had a continuing problem with handling customer funds or if executives diverted funds as the company's financial situation deteriorated and grew more desperate, the official said."
For more details about what sent MF Global into this tailspin, check out Felix Salmon at Reuters. CNBC's John Carney wonders if MF Global's problems are a "canary in the coal mine." Corzine, who is one of President Obama's more prolific fundraisers, cheated death in 2007 after his NJ State SUV, driven by a state trooper, was in a crash—Corzine was not wearing a seatbelt, lost half his blood, fractured his left femur, and broke six ribs on each side, his sternum, collarbone, and a lower vertebrae.
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bankruptcy
economy
jon corzine
mf global
Jen Chung
Jen Chung is a former WNYC and Gothamist editor.
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Gothamist is funded by sponsors and member donations
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