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Jon Corzine sued over MF Global collapse

Tue, 23 Apr 2013 16:02:00 +0000

Louis J. Freeh, a bankruptcy trustee for MF Global, sued former New Jersey governor and former MF Global CEO Jon Corzine and two other former executives of the firm, claiming they were "grossly negligent" in the days leading up to the firm's collapse.

The New York Times reports:

The lawsuit, which could help Mr. Freeh recover money for MF Global’s creditors, blamed Mr. Corzine for ramping up a risky bet on European debt. While the bonds were not by themselves to blame for the collapse of MF Global, the wager spooked the firm’s investors and ratings agencies, pushing it further into a tailspin.

“Corzine engaged in risky trading strategies that strained the company’s liquidity and could not be properly monitored by the company’s inadequate controls and procedures,” Mr. Freeh said.

“Defendants, in their capacities as officers, breached their fiduciary duties of care, loyalty, and oversight over the company, and failed to act in good faith,” Freeh wrote in the complaint.

GOP blames Corzine for MF Global collapse

Wed, 14 Nov 2012 23:05:00 +0000

WASHINGTON — Republicans on a House panel that investigated the collapse of the brokerage MF Global are pinning the blame on ex-CEO Jon Corzine, a former Democratic senator and governor.

The Republicans say the investigation has found that Corzine's decisions caused MF Global's bankruptcy in October 2011 and its loss of more than $1 billion in customer money.

They say Corzine turned the brokerage firm into an investment bank making risky trades. They also say Corzine ran the firm in an authoritarian manner and didn't allow anyone to challenge his decisions.

The firm failed after betting $6.3 billion on European debt that soured.

The House Financial Services oversight subcommittee is to release the report of its investigation Thursday.

A spokesman for Corzine did not immediately return a telephone call seeking comment Wednesday. Corzine told Congress last December that he never intended to misuse customer money or order anyone to do so.

Legal experts say it could be difficult for the government to build a persuasive case that he did know.

Rep. Randy Neugebauer, the Texas Republican who heads the subcommittee, said in a news release that choices Corzine made as the firm's CEO "sealed MF Global's fate."

America’s new culture of corruption

Tue, 04 Sep 2012 14:30:00 +0000

It’s proverbial that, in college football’s Southeastern Conference, “if you ain’t cheatin’, you ain’t tryin.’” (Given that SEC teams have won the last six national championships, it’s fair to speculate that there’s been a whole lot of tryin’ going on.)

Suitably translated into Latin, this might as well be our new national motto. In America today, crime pays, at least if you’re high up enough in the social hierarchy to take advantage of the fact that we’re increasingly willing to accept that laws are for little people.

What’s happened in the worlds of high finance and high politics can be analogized to what allegedly happened in the world of competitive cycling during the Lance Armstrong era. According to Armstrong’s former teammate and later rival Tyler Hamilton, all the top riders, including Armstrong and Hamilton, were using banned performance-enhancing drugs when Armstrong was winning seven Tour de France races.

According to Hamilton, they were doing so for two reasons: It was impossible to compete at the highest levels without cheating, and because the enforcement regime to catch cheaters was so easy to elude (Armstrong, who continues to deny using PEDs, points out that he has passed hundreds of drug tests).

Greed fatigue and MF Global

Wed, 14 Mar 2012 12:00:00 +0000

When word of the obscene bonuses being doled out to top executives of Jon Corzine’s failed MF Global went public the other day, I expected white-hot fury. A major brokerage had gone belly-up, $1.6 billion had simply “vanished,” and the people responsible for the mess are about to be enriched. But except for isolated pockets of outrage like congressional fist-shaking and a Minnesota farmer protest — victims demanding that the money go to them and not to the fat cats who ran the company into the ground — reaction has been subdued.

Call it Wall Street greed fatigue. You say there is a group of devious men (and they are usually men) who lost or stole the money from a large group of trusting and trustworthy people and then enriched themselves for their atrocious behavior? And we're supposed to be surprised? As a news story, the MF Global bonuses is familiar. The headline "Vultures Flourish in the Great Recession" reeks of 2009. Besides, what can you do about it? Not a single executive responsible for the crash of 2008 has gone to jail or even visibly suffered. After a while the story gets tiresome.

Ringmasters at the Corzine circus

Thu, 15 Dec 2011 15:00:00 +0000

The circus begins today at 1 o’clock.

I am, of course, referring to the congressional ritual known as the “no-cost inquisition.” Others will appear, but Jon Corzine is the star attraction. Sometime during the afternoon he will raise his right hand, swear to tell the truth, and then be subjected to impressive cross-examination by the House Financial Services Subcommittee on Oversight and Investigations in Washington. Corzine has been to several of these, so he knows he has a role to play.

His job will be to once again explain how MF Global became the Frankenstein of financial scandal, with elements of every financial scandal in recent years (without it being his fault in any kind of punishable way!). He will do his best to show humility, contrition and, above all, lack of scienter. This and the other MF Global hearings are useful exercises, shedding light on a grotesque example of Wall Street run rampant. They are unarguable Good Things. They keep up the decibel level, raise public awareness, and are fine for journalists, prosecutors (for they lock the witnesses into their stories) and any actual regulators out there. It’s a fine thing for Congress to exercise its oversight function, until you consider that no legislation of any value ever seems to emerge from them, because Congress is simply too corrupt and ideologically paralyzed.