A private regulatory body will consider on Wednesday whether it should ban former New Jersey Gov. Jon Corzine from putting other's people money at risk by trading in the commodities market.
The highly unorthodox move is being contemplated by the National Futures Association in response to a perceived lack of action by the government against Corzine, according to one of the people who is pushing the action forward.
Corzine was CEO of commodities broker MF Global in October 2011, when the firm collapsed, causing about $1 billion in losses to consumers whose money should have been safely guarded in separate accounts. In spite of congressional testimony accusing him of breaking the law in the firm's final few weeks, Corzine has not been charged with any crime and is rumored to be raising cash to start a commodities-focused hedge fund.
"Everyone's been waiting on the Department of Justice to say, 'We're going to do something' or 'We're not going to do anything' and then act," John Roe, who is a co-sponsor of the proposed ban in his capacity as regulator for the NFA, told The Huffington Post. Roe said his main concern was to "get something done and not wait around until the statute of limitations expires."
Admitting that his group's move to pre-empt a government entity in a high-profile case like Corzine's is "out of place," Roe says the industry is acting in its best interest, as traders in the U.S. commodities markets will not trust the system until they see Corzine held accountable.
"What's out of place here really is that nothing's happened so far," Roe said.
That Corzine's peers in the futures market should be seeking to ban him from associating with them professionally is only the latest in what has been a long fall from grace for Corzine. The former Democratic governor and U.S. Senator led Goldman Sachs in the 1990s and helped take that investment firm public, to the awe and adulation of Wall Street.
News of Wednesday's action were first reported by The New York Post.
Roe and James Koutoulas, another regulator for the NFA who will present the proposed lifetime ban on Wednesday, have been active in the aftermath of MF Global's demise. The two men, who run futures trading firms and who lost millions during MF's bankruptcy, have been leading a legal interest group looking to recover money for the firm's customers.
MF's 2011 bankruptcy resulted in losses to clients whose "segregated" accounts were improperly tapped by the cash-strapped company during its final days.
"If the NFA is going to let folks like that off, after they caused the first loss in consumer funds in segregation in the history of the United States, that's very concerning," Roe said
The NFA has banned 134 people from the industry since 2008, Koutoulas told the New York Post, although none of them has been as high profile as Corzine.
Requests for comment to the Justice Department and to representatives for Corzine were not immediately returned. A spokesman for the Commodities Future Trading Commission, the government regulator in charge of the futures market, declined to comment.