So, remember MF Global, the defunct derivatives and commodities broker that filed for bankruptcy? Well, Jon Corzine, the former Goldman Sachs banker and governor of New Jersey, is taking some heat for the loss, which some are saying is long overdue.
Here’s the Washington Post story:
A congressional report that deconstructs the collapse of MF Global concludes that the brokerage firm’s former head, Jon S. Corzine, sank the company by making risky investments and sidelining senior executives who challenged his strategies.
The report, scheduled for release Thursday, details the findings of a year-long investigation by Republican staffers on the House Financial Services oversight subcommittee. But it omits any mention of criminal wrongdoing by Corzine, punting that issue to the prosecutors and regulators who have launched their own probes into the matter.
Instead, it skewers Corzine for his “authoritarian” management style and reckless business strategies, many of which were carried out without the full knowledge of the company’s board of directors — assertions that Corzine’s legal team denied on Wednesday.
Here are the details from the New York Times:
While lawmakers avoided blaming Mr. Corzine directly for the missing customer money, sidestepping whether a crime was committed, they argued that his fixation with taking risk helped topple the firm. The report labeled Mr. Corzine the “de facto chief trader,” an unusual title for a top executive.
“Choices made by Jon Corzine during his tenure as chairman and C.E.O. sealed MF Global’s fate,” Representative Randy Neugebauer, a Republican from Texas who is overseeing the report as chairman of the oversight panel, said in a statement.
In a series of potential missteps, the report said, Mr. Corzine missed warning signs about MF Global’s weak liquidity. Citing “a dereliction of his duty,” the report claimed that he had left customers vulnerable to the invasion of their accounts.
The report further asserts that Mr. Corzine was the architect of a $6.3 billion bet on European debt — a trade so big it spooked the markets and led to a run on the firm. When subordinates challenged Mr. Corzine’s European gamble, according to the report, he imposed an “authoritarian atmosphere” in which he ejected the aides and installed sympathetic executives he knew from his days at Goldman Sachs.
Even as the findings made a case for civil and regulatory action, the report shed little new light on Mr. Corzine’s actions and hardly chipped away at his legal defense. Federal authorities have all but officially removed the darkest cloud looming over Mr. Corzine: the threat of criminal charges.
Even the New York Post weighed in on the scandal:
Among Corzine’s shortcomings as laid out in the report are:
* He created an “authoritarian atmosphere” where “no one could challenge his decisions.”
* He acted as MF’s “de facto chief trader,” allowing him to build a risky European bond portfolio “well in excess of prudent limits.”
* He failed to fully disclose MF’s European bond holdings to federal regulators and the investing public.
In scathing excerpts of a report to be released today, Republican members of the panel also blamed Corzine for a scandalous $1.6 billion shortfall in customer accounts that emerged in the aftermath of the bankruptcy — although they stopped short of saying Corzine should be held criminally liable for the loss.
Instead, the report described the shortfall as the result of MF’s final, chaotic days leading up the bankruptcy.
Employees wrongfully withdrew customer funds because “they did not have an accurate accounting of the amount of customer funds the company held,” the lawmakers found.
Well, that’s great, but they’re still avoiding charging him with any wrongdoing. It seems that we still need regulators with the ability to hold people responsible for their actions and decisions. If you bring down a whole firm costing countless millions in contracts, jobs and lost investments, you should be held accountable. Maybe one day we’ll get there.
