Former MF Global chief Jon Corzine was subpoenaed to testify before Congress, setting up an awkward legal situation for the ex-senator facing multiple probes into the firm's collapse.
A House Agriculture Committee voted unanimously on Friday to compel Corzine to testify at its December 8 hearing after he reportedly refused an earlier invitation.
The move intensifies pressure on Corzine. He has been largely absent from public view since he resigned early last month, following MF Global's October 31 bankruptcy filing and revelations that hundreds of millions of dollars in customer funds was missing.
A spokesman for Corzine and his lawyer, Andrew Levander, declined to comment.
It is this committee's responsibility to shed light on the facts and circumstances surrounding the bankruptcy, said Frank Lucas, the Republican chairman of House Agriculture Committee.
Three congressional panels have requested that Corzine testify this month, but it is unclear if he will publicly answer lawmakers' questions.
It is in Corzine's best interest to invoke his right to avoid self-incrimination under the Fifth Amendment of the U.S. Constitution, said Barry Pollack, a criminal defense attorney at Miller Chevalier.
His best-case scenario in testifying is that they use him as a punching bag. His worst-case scenario is that he provides testimony that can subsequently be used by law enforcement authorities putting together a criminal case against him, Pollack said.
But Pollack said public figures are genetically predisposed to give their side of the story.
MF Global filed for bankruptcy in late October, after $6.3 billion in risky bets on European sovereign debt spooked investors and an effort to sell the company failed.
Investigators are searching for as much as $1.2 billion in missing customer money, which regulators said the firm may have diverted for its own needs - a major violation of industry rules. Regulators are probing MF Global's business practices, including its accounting and disclosures. The FBI also has shown an interest in the missing funds.
Neither MF Global nor its executives has been charged with wrongdoing.
Artur Davis - a criminal defense attorney at SNR Denton and former U.S. congressman - said that testifying would pose a wild risk to Corzine. Not only could his testimony be used against him in any future proceedings, said Davis, but Corzine could open himself up to potential prosecution for making false statements to Congress.
Under one scenario, according to Davis, Corzine's attorneys could send the committee a letter pleading the fifth, which would free Corzine from an uncomfortable question-and-answer session before the committee.
Alternately, both sides could agree to let Corzine appear, read a short statement invoking the Fifth Amendment, and leave.
Less likely, said Davis, is that Corzine will testify, and be forced to plead the fifth after each question. The committee has to decide if it wants a spectacle, he said.
In a recent example, two executives from Solyndra solar company pleaded the Fifth before lawmakers investigating the Obama administration's energy loan program.
Twenty times, the executives read out a prepared statement declining to answer the questions at a September hearing to examine the company, which collapsed after receiving billions of dollars in government funding.
Other high-profile figures under scrutiny have chosen to talk from the hot seat, including former Lehman Brothers CEO Dick Fuld and Goldman Sachs CEO Lloyd Blankfein.
Bradley Bondi, a partner at Cadwalader, Wickersham & Taft LLP in Washington who represents witnesses before Congress, said the decision on whether to testify can be a tough call.
He said lawyers face a difficult balancing act between not wanting to make your client look bad in public for refusing to answer questions, and on the other hand, ensuring the client is not exposed to criminal or civil liability for something said during a congressional hearing.
Corzine is facing multiple requests to appear before congressional panels. On Friday, Senate Agriculture Committee Chairwoman Debbie Stabenow said her panel will vote next week on whether to subpoena Corzine to testify at its December 13 MF Global hearing.
A House Financial Services panel says it is also working with Corzine's attorneys to have the former MF Global Chief answer questions at its December 15 subcommittee hearing.
Separately on Friday, MF Global said the remaining members of its board of directors resigned on November 28, following Corzine's departure from the board.
The resignations were expected. They came the same day a federal bankruptcy judge approved the appointment of former FBI director Louis Freeh as MF Global's Chapter 11 trustee.
(Reporting by Alexandra Alper and Charles Abbott in Washington, additional reporting by Grant McCool and Jonathan Stempel in New York; Editing by Steve Orlofsky, Dave Zimmerman and Gunna Dickson)