Former MF Global Holdings Ltd (OTCMKTS:MFGLQ) CEO Jon Corzine has been charged for his involvement with the collapse of the futures brokerage by the Commodity Futures Trading Commission. The CFTC hopes to fine Corzine and Edith O'Brien, MF Global's assistant treasurer, and ban them from the futures trading industry, according to Reuters.
Corzine joined MF Global as CEO in 2010 and instituted a plan to convert the futures trading brokerage into an investment bank. When the company was hemorrhaging money during Europe’s economic downturn in 2011, MF Global used customer money to back up trading deals. By the end of the year, $1.6 billion in customer money vanished, and MF Global filed for a $41 billion bankruptcy, one of the largest in the nation’s history.
CFTC enforcement head David Meister believes Corzine, who also served as CEO of Goldman Sachs and as governor of New Jersey, is guilty of actively using customer money for bogus deals. It's alleged that Corzine knew about the company’s low cash reserves but continued spending in large amounts. O’Brien allegedly helped Corzine in these endeavors.
"Mr. Corzine is charged with being more than a passive actor in the downfall of MF Global," Meister told Reuters on Thursday. "He lacked good faith and ... violated his supervision obligations."
"Our investigation also recovered an audio recording of [O'Brien] saying to a colleague that it could be 'game over' from a regulatory perspective if the customer funds weren't returned," Meister continued.
Despite the CFTC’s claim that it has solid proof of Corzine’s involvement in the unlawful spending of customer money, Corzine’s lawyers continue to maintain his innocence.
"This is an unprecedented lawsuit based on meritless allegations," Andrew Levander, an attorney for Corzine, told Reuters. "Mr. Corzine did nothing wrong, and we look forward to vindicating him in court.”
Also on Thursday, the CFTC reached a settlement with MF Global. The company will be allowed to continue operations, but it must pay the CFTC and consumers a $100 million fine to begin paying them back for the cash that vanished in 2011.
Eric Brown is an IBTimes reporter who eats far too much pizza. He is a graduate of Mercer University in Macon, Georgia, and currently resides in Brooklyn.