- Corzine did not shoulder full blame and said trades at MF Global were done without his full participation.
Three panels of witnesses testified on the recent collapse and bankruptcy of MF Global during a lengthy, frequently testy House Agriculture Committee hearing on Thursday. No one’s testimony was more anticipated than Jon Corzine’s, the former investment firm’s head (as well as being a former senator and governor of New Jersey).
In prepared testimony, Corzine – who’d been subpoenaed to appear before the committee — acknowledged the impact of the firm’s fall and subsequent problems faced by customers whose funds have been frozen in bankruptcy proceedings. Corzine approached the hearing “with great sadness. My sadness, of course, pales in comparison to the losses and hardships that customers, employees and investors have suffered as a result of MF Global’s bankruptcy. Their plight weighs on my mind every day – every hour. And, as the chief executive officer of MF Global at the time of its bankruptcy, I apologize to all those affected.”
However, Corzine did not shoulder full blame and said trades at MF Global were done without his full participation.
“Even when I was at MF Global, my involvement in the firm’s clearing, settlement and payment mechanisms, and accounting was limited.”
Corzine also said he was “stunned” to learn of “lost” customer funds. Further “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.”
For Corzine’s full prepared testimony, see here.
Facing withering criticism and multiple investigations, Corzine also attempted to ameliorate his culpability by not invoking his right to remain silent.
“Considering the circumstances, many people in my situation would almost certainly invoke their constitutional right to remain silent – a fundamental right that exists for the purpose of protecting the innocent. Nonetheless, as a former United States Senator who recognizes the importance of congressional oversight, and recognizing my position as former chief executive officer in these terrible circumstances, I believe it is appropriate that I attempt to respond to your inquiries.”
Corzine also claimed reports that say MF Global’s risks and leverage (in the range of 40-to-one) during the lead-up to collapse are incorrect. “One of the recurrent themes in the media has been that MF Global took on too much riskduring my tenure, in particular the amount of leverage that MF Global bore at the time of itsbankruptcy. In fact, MF Global reduced leverage. In the quarter ended March 31, 2010, MFGlobal’s leverage was 37.3. During my tenure, it was consistently around 30.”
Editor’s note: full coverage of the House hearing to follow.