Jon Corzine Warned About MF Global's Europe Bets Before Collapse: Report

A top official within MF Global warned the company's former CEO John Corzine about the firm's growing bet on European bonds -- a risk that likely plunged MF Global into bankruptcy.

Michael Roseman, MF Global's chief risk officer, warned Corzine in meetings between the two of them as well as in huddles with others present that the company didn't have enough cash on hand to withstand a fallout from its position in Italian, Portuguese, Spanish and Belgian bonds, according to the Wall Street Journal. Still, MF Global's board allowed the firm's exposure to European debt to grow from $1.5 billion at the end of 2010 to $6.3 billion right before the company declared bankruptcy at the end of October.

Corzine wasn't the first top dog of a scandal-ridden company to ignore warnings from other company officials. Sherron Watkins, a former vice president of Enron, warned the company's founder, Kenneth Lay, in August 2001 that off-the-books structures known as Raptors could harm the firm, according to The New York Times. Enron collapsed into bankruptcy in 2001 and dozens of its former employees have faced criminal charges.

MF Global filed for bankruptcy on October 31 after losing big on its European bets, and revealed that it was missing more than $600 million in customer funds, prompting regulators to launch a broad probe. Corzine, a former senator and governor of New Jersey, resigned days after the bankruptcy and the company fired its entire brokerage arm or more than 1,000 employees.

Two former employees filed a lawsuit against Corzine and other top executives Monday, claiming they lied to workers about the firm's finances and encouraged them to put retirement savings into company stock that ultimately plunged.

Even if he isn't forced to pay up in the lawsuit, Corzine likely won't get off scot-free. Congress called Corzine to testify this month to answer questions about how MF Global fell into bankruptcy so quickly. In addition, the Commodity Futures Trading Commission, a government regulator, approved a rule Monday tightening restrictions on how trading firms can invest their clients' money -- a provision Corzine lobbied against.

Comments

[Wyattb56]

02:14 PM on 12/08/2011

Bermie Madoof needs a cell mate. Put this putz in jail. It' nonesense to tell investors you don't know where 1.5 billion dollars went.

Tell him to look in his pockets or in his off shore accounts.

[stargazer13]

11:41 AM on 12/08/2011

when asked where the money is he said I don;t know ::

Ok I have a solution to all the missing money in this country and other ,s
put the ridf tags on our money then we can all follow the money !! every where it goes :)

[Java1959]

02:44 PM on 12/07/2011

Funny how all the wing-nuts and right wing media are really amplifying this story and don't say anything about the majority of the countless crooks on the Right who dropped us into recession. I'm not defending this guy but lots of people deserve blame including the vast majority on the Right who changed government policies and created the environment to allow these financial crimes to be legal.

[rysagr]

12:45 AM on 12/08/2011

that isn't the point. the point is you guys bury that he is a dem. if he were a republican it would lead every day all day.

[stargazer13]

11:39 AM on 12/08/2011

I my self want both parties cleaned out !!

[Wyattb56]

02:16 PM on 12/08/2011

hear hear

[nelthroppesq]

12:08 PM on 12/08/2011

What are you doing then? If Corzine screwed up he screwed up what does the Right have to do with it? Focus!!!

[olddognewtrick]

11:55 AM on 12/07/2011

Bet you this head MFer takes the fifth on all questions at all hearings...

[Eagleman]

10:57 AM on 12/07/2011

Oh really ?

Is HP trying to get him out of jail ? Probably they should blame it on Bush or Chris Christie

[jantomnidrah]

10:48 AM on 12/07/2011

Typical Democrat action. Easy come Easy go. Who cares it is somebody elses money. Tax the rich to make it up and blame Bush.

[justleft]

07:33 AM on 12/07/2011

CorSLIME should be in the prison cell next to madoff!

Oh wait, he's a Demon_Crat!!

[katooom]

05:54 AM on 12/07/2011

No wonder our country is in the toilet. When a guy with zero real experience is running the country it would be hard to expect different. And he loves to hang around crooks it seems.

Here’s what Obama said in October 2009 while stumping for Mr. Corzine’s re-election bid as the Democratic governor of New Jersey:

- "You’ve had an honorable man, a decent man, an honest man, at the helm of this state. … He’s fought for what matters to ordinary folks.”

- “People…say, ‘You know, I was saving up all my life. …. Suddenly, because of this financial crisis, I may have to go back to work.’ “

- “Jon knows these are challenging times. This is why he got into public service. He didn’t do it for the paycheck.”

- “This crisis…came about because of the same theories, the same lax regulation, the same trickle-down economics that the other guy’s party has been peddling for years.”

- “Jon’s got the mop and he’s cleaning up after somebody else’s mess.”

- “One of the things you’ve got in Jon Corzine is somebody who tells it to you straight,” Mr Obama said.

When will Obama retract these statements?

[Zloki]

11:12 AM on 12/08/2011

Apparently, Jon's not all that great with a mop. ;)

But he DID tell it to everybody straight. He went right out there and said, "Yep, we definitely lost all your money and we're going under." No sugar-coating that one, eh?

Though clearly you have missed out on how politics works. Nobody issues retractions for anything more than a year ago. They issue "clarifications." Corzine was supported at that point when he was useful, now that he's toxic he'll be relegated to something quiet.

I'm also exceptionally confused by this statement: "he loves to hang around crooks it seems." This is politics! If one didn't mind hanging out with crooks, one wouldn't go into the business!

[nelthroppesq]

12:10 PM on 12/08/2011

Everybody knew he was corrupt when he had his mistress on a salary.

[jc323]

12:53 AM on 12/07/2011

There are two sides to this contract, who made the money on the other side of this deal? I have to wonder if this was an inside deal. A good anology for what this guy did, lets say your bank took your saving account combines this with other savings accounts, loaned out this money and the loan then defaults, then the bank tells you "sorry we lost your money", wouldn't that be criminal?

[rotorhead1871]

12:32 AM on 12/07/2011

hope all these funds just go broke...they so deserve it......

[ForVivi]

11:37 PM on 12/06/2011

This idiot always has a grin on his face. Has he no shame? Wait, I know the answer.

[hrpmap]

11:07 PM on 12/06/2011

Sorry here's the link. http://www.nypost.com/p/news/national/jon_bubba_twist_2uQpRRaeEVM7RNVGelCojO

[hrpmap]

11:06 PM on 12/06/2011

Story on NY Post, 600K of investers money went to Bill Clinton

[justleft]

07:34 AM on 12/07/2011

Kickbacks - NICE

[1sanevoice]

10:15 PM on 12/06/2011

He was playing the Russian late 90's debt crisis but got in too early.

[tepeko]

10:07 PM on 12/06/2011

People forget that Corzine was "forced out (fired)" at Goldman Sacks. As a US Senator he brought nothing home to the state of New Jersey, and as a governor he was an incompetent fool. When I was involved in government in NJ I got to met with Corzine a few times and he was very unimpressive! You can guess how bad he was when the GOP runs a guy who beats him and the Democrats still won in the legislature!