Thursday, December 8, 2011

Corzine: I Don't Know Where MF Money Is

Jon Corzine, the former U.S. senator, New Jersey governor and Senior Partner of Goldman Sachs, who presided over the collapse of the commodities brokerage MF Global, says he cannot explain what happened to “many hundreds of millions of dollars” that the firm was holding for customers.



In testimony prepared for delivery to Congress this morning, Corzine says he was “stunned” to learn shortly before the firm sought bankruptcy protection that MF Global could not account for the money.

“I simply do not know where the money is, or why the accounts have not been reconciled to date,” the former MF Global chief executive says, according to the testimony.


From Corzine statement:

I accept responsibility for the RTM trades that MF Global engaged in from the time that I arrived at MF Global until my departure, on November 3, 2011, and I strongly advocated the trading strategy that I have described here. It is important to recognize, however, that MF Global’s involvement in RTM trades was disclosed to the board of directors, the senior officers
of the company, the company’s accountants and numerous outsider...

On October 17, 2011, the Wall Street Journal published an article that described the FINRA ruling that MF Global had disclosed on September 1. Other news stories followed, and some of MF Global’s counterparties decided to reduce their exposure to the company, requiring some adjustment in our financing. MF Global’s stock began to perform relatively poorly...

During the week of October 24-28, 2011, MF Global undertook extraordinary steps to ensure that it was able to honor customers’ requests to withdraw funds or collateral. To the best of my recollection, during that week the firm unwound hundreds of millions of dollars worth of RTMs, and sold the underlying sovereign debt instruments; it also sought to draw down its
revolver loans from a consortium of banks led by J.P. Morgan. On October 27, MF Global sold,to the best of my recollection, $1.3 billion in commercial paper instruments for same-day settlement, and over $300 million in corporate securities, also for same-day settlement. The next17 day, I believe that MF Global sold approximately $4.5 billion in United States agency securities.
Over the course of the week, MF Global reduced the size of its match book by, to the best of my recollection, approximately $10 billion. Despite our best efforts to sell assets and generate liquidity, the marketplace lost confidence in the firm...

During my tenure at MF Global, to the best of my recollection, I never spoke with the President of the New York Federal Reserve William Dudley until approximately the week preceding the bankruptcy of MF Global, other than on one occasion (on or about April 13, 2011)when he and I attended a speech at Princeton by Chairman Bernanke of the Federal Reserve. To the best of my recollection, Mr. Dudley and I greeted each other on that occasion, but did not engage in substantive conversation. During my tenure at MF Global, to the best of my recollection, I did not speak with any governor of the Federal Reserve other than to greet Chairman Bernanke after his presentation at Princeton...

Obviously on the forefront of everyone’s mind – including mine – are the varying reports that customer accounts have not been reconciled. I was stunned when I was told on Sunday,October 30, 2011, that MF Global could not account for many hundreds of millions of dollars of client money. I remain deeply concerned about the impact that the unreconciled and frozen
funds have had on MF Global’s customers and others. As the chief executive officer of MF Global, I ultimately had overall responsibility for the firm. I did not, however, generally involve myself in the mechanics of the clearing and
settlement of trades, or in the movement of cash and collateral. Nor was I an expert on the complicated rules and regulations governing the various different operating businesses that comprised MF Global. I had little expertise or experience in those operational aspects of the business...

I simply do not know where the money is, or why the accounts have not been reconciled to date. I do not know which accounts are unreconciled or whether the unreconciled accounts were or were not subject to the segregation rules. Moreover, there were an extraordinary number of transactions during MF Global’s last few days, and I do not know, for example, whether there
were operational errors at MF Global or elsewhere, or whether banks and counterparties have held onto funds that should rightfully have been returned to MF Global. I am sure that the trustee in bankruptcy, the SIPC receiver, and the regulators are working to answer these questions and to understand precisely what happened during the firm’s last days and hours.
As the chief executive officer of MF Global, I tried to exercise my best judgment on behalf of MF Global’s customers, employees and shareholders. Once again, let me go back to where I started: I sincerely apologize, both personally and on behalf of the company, to our customers, our employees and our investors, who are bearing the brunt of the impact of the
firm’s bankruptcy.


  1. That's why CEOs get paid the big bucks jonny - surely u knew/know but assuming for a sec u didn't, it wass A) ur job to ensure no funds were missing ever B) ur job to find out where this money is. CEOs r responsible for the ship.

    Obviously is/will be sued in civil court but what has become of leaders in various fields when they do not take responsibility for their actions and hold themselves accountable. If u really don't know and these funds were perpetrated by insiders behind ur back (yeah right), shouldn't u have been apologizing to customers and working ur tail off to get the funds back (after working said tail off to find out where dollars went) and also doing all u can to get someone/anyone to cover the shortfall.

    Oh wait, he resigned right away. Makes sense - ur bets bankrupted the firm. But guess what - the funds were stolen Before u resigned. And no statement other than I don't know??

    I don't know is essentially the 5th. Wonder if they'll ask whether he knew beforehand funds would be gone even if did not know to whom...

    I know, his job wasn't to keep direct track of the funds...yet his job was to oversee those whose job it way his mInd didn't turn to the customer segregated funds once he knew the ship was officially coming down...

  2. "umm...bad temp staff....just the economy these days...sorry my bad'

  3. Don't look to have Madoff a cribbage partner with this parasite soon. This crook is well insulated by the powers that be.

  4. Imagine if Corzine had personal liability for the losses. Would his answers be so evasive?

    In Switzerland, the term "private banker" corresponds to a strict definition referred to in the Federal Banking Act; they are banks with a specific legal structure: sole ownership, general partnership, limited partnership or limited partnership with shares. The special status attributed to private bankers is justified by the presence among them of one or several partners with unlimited liability for the bank's commitments.