Jon Corzine Slammed in Report on Collapse of MF Global

Ex-Senator Was 'Negligent' in Failure: Report

Harsh Verdict: Jon Corzine was blamed for the failure of MF Global Holdings in a scathing 124-page report.
getty images
Harsh Verdict: Jon Corzine was blamed for the failure of MF Global Holdings in a scathing 124-page report.

By Reuters

Published April 04, 2013.
  • Print
  • Share Share
  • Single Page

(page 2 of 2)

Corzine’s spokesman, Steven Goldberg, said in a statement the blame for MF Global’s collapse rested with those outside the company.

He said the report “intentionally ignores the failure of counterparties to fulfill their commercially contracted obligations to MF Global and the profound impact this failure had on MF Global’s customers and other stakeholders.”

Freeh was appointed by the U.S. Bankruptcy Court in Manhattan to oversee the company’s liquidation for the benefit of creditors.

His responsibilities include pinpointing possible legal liabilities of the management, and he singled out the “failures” of Corzine, former chief operating officer Bradley Abelow and former chief financial officer Henri Steenkamp.

The three “contributed to the losses suffered by Holdings Ltd and FinCo, which the trustee estimates to be between $1.5 billion and $2.1 billion.”

UNPRECEDENTED

Freeh’s report follows several investigations by regulators as well as by a separate trustee appointed to recover funds for customer trading accounts. An attorney who is leading a class action on behalf of trading clients said Freeh’s report did not reflect that it is unprecedented to have a shortfall in customer trading accounts in the failure of a brokerage.

“Negligence isn’t strong enough to describe the conduct of Corzine and the other officers,” said Merrill G. Davidoff, an attorney with Berger & Montague. “I think he is understating the scope of the problem.”

Freeh’s report does not use the word “criminal,” although Edith O’Brien, an assistant treasurer at MF Global’s brokerage business, invoked her Fifth Amendment right against self-incrimination when called to appear before lawmakers last year.

Freeh said in a footnote in the document that he believed the customer shortfall was as small as $6 million and that there might even be a $120 million surplus. Davidoff said the shortfall was in the “hundreds of millions dollars.”

The trustee for the trading clients, James Giddens, has said he expects to recover at least 93 percent of their funds.

His spokesman said in a statement on Thursday that the remaining shortfall may be reduced by recovering money from former officers and directors of MF Global Holdings, the auditors and the Chicago Mercantile Exchange.

Many of the lawsuits over MF Global’s collapse have been consolidated in federal court in Manhattan.

On Friday, U.S. Bankruptcy Judge Martin Glenn will be asked to approve MF Global’s plan of liquidation. General unsecured creditors of the holding company are expected to collect between 14.7 cents and 34 cents on the dollar of what they are owed, according to court documents.

The case is MF Global Holdings Ltd, U.S. Bankruptcy Court, Southern District of New York, No. 11-15059


The Jewish Daily Forward welcomes reader comments in order to promote thoughtful discussion on issues of importance to the Jewish community. In the interest of maintaining a civil forum, The Jewish Daily Forwardrequires that all commenters be appropriately respectful toward our writers, other commenters and the subjects of the articles. Vigorous debate and reasoned critique are welcome; name-calling and personal invective are not. While we generally do not seek to edit or actively moderate comments, our spam filter prevents most links and certain key words from being posted and The Jewish Daily Forward reserves the right to remove comments for any reason.





Find us on Facebook!
  • "I thought I was the only Jew on a Harley Davidson, but I was wrong." — Gil Paul, member of the Hillel's Angels. http://jd.fo/g4cjH
  • “This is a dangerous region, even for people who don’t live there and say, merely express the mildest of concern about the humanitarian tragedy of civilians who have nothing to do with the warring factions, only to catch a rash of *** (bleeped) from everyone who went to your bar mitzvah! Statute of limitations! Look, a $50 savings bond does not buy you a lifetime of criticism.”
  • That sound you hear? That's your childhood going up in smoke.
  • "My husband has been offered a terrific new job in a decent-sized Midwestern city. This is mostly great, except for the fact that we will have to leave our beloved NYC, where one can feel Jewish without trying very hard. He is half-Jewish and was raised with a fair amount of Judaism and respect for our tradition though ultimately he doesn’t feel Jewish in that Larry David sort of way like I do. So, he thinks I am nuts for hesitating to move to this new essentially Jew-less city. Oh, did I mention I am pregnant? Seesaw, this concern of mine is real, right? There is something to being surrounded by Jews, no? What should we do?"
  • "Orwell described the cliches of politics as 'packets of aspirin ready at the elbow.' Israel's 'right to defense' is a harder narcotic."
  • From Gene Simmons to Pink — Meet the Jews who rock:
  • The images, which have since been deleted, were captioned: “Israel is the last frontier of the free world."
  • As J Street backs Israel's operation in Gaza, does it risk losing grassroots support?
  • What Thomas Aquinas might say about #Hamas' tunnels:
  • The Jewish bachelorette has spoken.
  • "When it comes to Brenda Turtle, I ask you: What do you expect of a woman repressed all her life who suddenly finds herself free to explore? We can sit and pass judgment, especially when many of us just simply “got over” own sexual repression. But we are obliged to at least acknowledge that this problem is very, very real, and that complete gender segregation breeds sexual repression and unhealthy attitudes toward female sexuality."
  • "Everybody is proud of the resistance. No matter how many people, including myself, disapprove of or even hate Hamas and its ideology, every single person in Gaza is proud of the resistance." Part 2 of Walid Abuzaid's on-the-ground account of life in #Gaza:
  • After years in storage, Toronto’s iconic red-and-white "Sam the Record Man" sign, complete with spinning discs, will return to public view near its original downtown perch. The sign came to symbolize one of Canada’s most storied and successful Jewish family businesses.
  • Is $4,000 too much to ask for a non-member to be buried in a synagogue cemetery?
  • "Let’s not fall into the simplistic us/them dichotomy of 'we were just minding our business when they started firing rockets at us.' We were not just minding our business. We were building settlements, manning checkpoints, and filling jails." What do you think?
  • from-cache

Would you like to receive updates about new stories?




















We will not share your e-mail address or other personal information.

Already subscribed? Manage your subscription.